Nomura recommends 'buy' on Dubai debt

NomuraInvestment firm Nomura International stated that, Dubai Government bonds and credit default swaps (CDS) continue to remain recommended investment options.

Ann Wyman, Nomura's Managing Director and Head of Emerging Markets Research, Europe, wrote in a report, "Market pricing of Dubai's sovereign risk does not reflect current fundamentals in our opinion, and we therefore recommend exposure either through CDS or government bonds."

As stated by the CMA DataVision's Sovereign Risk Monitor, the CDS rates of Dubai Government have declined by more than 35 per cent to 418 basis points since mid-February, as compared to around 652 basis points.

Maybe one of the major unknowns going into the Dubai World restructuring was the potential treatment of bondholders. Like, the hint that Nakheel 2010 and 2011 holders would be paid in full, and on time, was understandably taken as a positive sign by the markets, with subsequent meaningful rallies in both corporate bonds and sovereign CDS.

Nomura told that most of the region's sovereign debt had been narrowed by the external debt spreads where as they still stayed wide for Dubai.