LONDON, Dec 14 (Reuters) - The cost of insuring Dubai sovereign debt plummeted by more than 120 basis points on Monday after the emirate surprised markets with an announcement that it had obtained a $10 billion lifeline from neighbouring Abu Dhabi to help repay some of its debt. [ID:nLDE5BD0FV]
Credit default swaps (CDS) to insure Dubai debt for five years was quoted at 417.2 bps, down from 540.5 bps late Friday, according to CMA DataVision.
This represents a nearly 230 bps descent from the trading close on Nov. 27, just two days after the emirate shocked investors by requesting for a standstill on the debt of its state-owned Dubai World conglomerate.
Five-year CDS for state-owned Dubai Ports World (DPW.DI) were quoted at 435.5 bps, down from 570.8 bps at the close of last week. This means it would cost $435,500 to insure $10 million of the firm's debt for five years.
The cost of insuring Abu Dhabi sovereign debt was quoted seven bps lower from Friday at 153.5 bps while that for non-UAE member Qatar was quoted at 99.5 bps, down from 108.4 bps. (Reporting by Sebastian Tong; editing by Jeremy Gaunt)