Dubai firms told bondholders they were safe a day after a bailout allowed troubled developer Nakheel to repay its bond, but investors still fretted over the future of the United Arab Emirates as an investment destination.

Dubai's stock market <.DFMGI>, up 22 percent in recent sessions, fell 1.5 percent, with analysts saying worries over Dubai's debt position remained high in investors minds. The cost of insuring Dubai's debt against restructuring or default rose slightly.

And ratings agency Moody's placed Abu Dhabi Commercial Bank , Commercial Bank of Dubai , Dubai Bank and HSBC MIddle East on review for possible downgrades, citing potential continued deterioration in Dubai's operating environment and exposure to Dubai World companies' debt.

Abu Dhabi threw debt-laden fellow United Arab Emirates (UAE) member Dubai a $10-billion lifeline on Monday to head off a looming bond default by developer Nakheel and keep its parent, Dubai World, afloat through to the end of April next year.

State-owned Dubai World asked investors on November 25 for a standstill on debt payments.

In a separate development on Tuesday, the foreign minister of Kuwait, which has one of the world's largest wealth funds, said his country had offered the UAE help in overcoming the Dubai debt crisis.


Government utility Dubai Electricity and Water Authority (DEWA) told bondholders to expect a coupon payment on a $3.2 billion Islamic bond on December 16, as scheduled.

DEWA made its announcement in response to questions from markets operator Nasdaq Dubai, which had asked for information to determine the current value of securities listed on the bourse.

Other Islamic bond issuers linked to Dubai's government, including DP World , Dubai Holding, Dubai Islamic Bank and DIFC Investments also made reassurances.

But analysts remained skeptical on the outlook for the emirate.

Goldman Sachs' Ahmed Akarli said other Dubai entities faced similar challenges to those of Dubai World given the fact Dubai's total debt stocks stand close to $120 billion and at least $55 billion will be coming due ... within the next three years.

Vyas Jayabhanu, head of investments at Al Dhafra Financial Broker said: The market overreacted yesterday on the Dubai news. This (Nakheel) is only one problem solved and it does not mean the recovery phase of the company (Dubai World) is on track.

Earlier on Tuesday Nakheel said repayment of a bond that was due on Monday was on the way, with funds distributed to the clearing system after being sent to the principal paying agent.

Two bondholders told Reuters the funds had yet to clear. This is a technicality, said Rami Sidani, Schroders Middle East head of investment, referring to the payment. The decision was made and the announcement was clear and so now it's a formality. This sukuk is behind us.

Nakheel has two other bonds outstanding -- a 3.6 billion dirham ($980 million) issue maturing on May 13 next year and a $750 million deal due January 2011. Neither is guaranteed by the government or Dubai World.

The bond being repaid on Tuesday using $4.1 billion of the $10 billion bailout was a litmus test for parent company Dubai World's planned $26 billion restructuring.

(Writing By John Irish; Editing by David Holmes and Andrew Callus)