DUABI CRISIS ARTICLES:

FINANCIAL CRISES: DUBAI BUBBLE BURST

You know about Dubai's economic crisis. But do you know the background to and fallout from - the crisis? A Brief History Historically, Dubai had an oil-based economy. But because Dubai's oil reserves were declining, the government - led by Sheikh Muhammed Al Maktoum - decided to diversify into other areas, especially tourism and commerce. See this and this. That's why Dubai built the world's only 7 star hotel, a series of luxury islands, and the world's largest tower. But the global property bubble is bursting. As I wrote last December: Housing bubbles are now bursting in China, France, Spain, Ireland, the United Kingdom, Eastern Europe, and many other regions. And the bubble in commercial real estate is also bursting world-wide. See this. But Dubai got hit the hardest. As Bloomberg notes: Dubai suffered the worlds steepest property slump in the global recession, with home prices dropping 50 percent from their 2008 peak, according to Deutsche Bank AG. As the CBC notes, things went South quickly in Dubai: Hundreds of billions of dollars worth of building projects were delayed or cancelled. Thousands of jobs disappeared. Dubai, playground of the ber-extravagant, suddenly found itself facing the

very real possibility that its biggest state-owned company, Dubai World, could go into bankruptcy. It warned it was having trouble making debt payments on $59 billion US money borrowed to pay for all the excess. Global Impact The CBC also notes that Dubai World has holdings worldwide: Dubai World is Dubai's main holding and investment enterprise, but its holdings range far beyond the Persian Gulf area ... Another Dubai World holding DP World operates Centerm, a container terminal in Vancouver's inner harbour. DP World acquired the terminal when it bought the marine terminal assets of P&O Ports in 2006, and plans to spend $140 million to expand it. That purchase also gave it ownership of many key U.S. ports something that raised national security concerns in the U.S. Some American legislators didn't like the idea that U.S. ports would be controlled by Middle Eastern state-owned enterprises. DP World subsequently sold its U.S. port assets. In Britain, another Dubai World subsidiary, Leisurecorp, bought the Turnberry Resort in Scotland in 2008 home to the 2009 British Open for more than 50 million pounds. In the U.S., Dubai World's investment arm, Istithmar World, bought the luxury retailer Barneys New York in 2007 for almost $1 billion US. There were reports earlier this year it was trying to unload the retailer as the luxury market unwound and Istithmar racked up big losses from the global financial meltdown, but Dubai World's chair denied it. In addition, Bloomberg notes that India might be effected by Dubai's economic problems: About 4.5 million Indians live and work in the Gulf region and remit more than $10 billion annually, according to government data. The turmoil may affect remittances, said Thomas Issac, finance minister of the southern state of Kerala, which accounted for about a quarter Indias migrant labor in 2005... Remittances from the Middle East account for about 25 percent of Keralas economy, Issac said The Royal Bank of Scotland is Dubai's biggest creditor, with $2.3 billion, or 17 percent, of Dubai World loans since January 2007. HSBC, Europes biggest bank, has the largest absolute exposure in the U.A.E. with $17 billion of loans

in 2008 Yves Smith notes that Dubai's default caught creditors by surprise: I got a message from someone who was on the conference call [with Dubai government officials]... Some European banks may be on the wrong side of this trade. As readers may know, EuroBanks went into the crisis with even lower capital levels than their US counterparts, and have taken fewer writedowns of their dodgy exposures: The standstill announcementwas a massive surprise. One could sense the panic in those asking questions.this could be the turning point in spreads and could be viewed similar to the Russian debt crisis in 1998 or the Bear situation in 2007based on companies and the accents of the people asking questions, it is obvious European institutions will be hit hardDubai made this announcement at the beginning of a four day holiday, so there will be little news until next weekThere is another wave of pain out there. This information does not seem to be making its way to other markets. It will. Zero Hedge has a good roundup of statistics regarding the biggest creditors of the United Arab Emirates, of which Dubai is a part: Creditors: Of United Arab Emirates (By Origin via Credit Suisse citing Bank for International Settlements): United Kingdom: $50.2 billion France: $11.3 billion Germany: $10.6 billion United States: $10.6 billion Japan: $ 9.0 billion Switzerland: $ 4.6 billion Netherlands: $ 4.5 billion Of United Arab Emirates (By Entity via Credit Suisse, citing Emirates Bank Association): HSBC Bank Middle East Limited: $17.0 billion Standard Chartered Bank: $ 7.8 billion Barlays Bank Plc: $ 3.6 billion ABN-Amro (RBS): $ 2.1 billion Arab Bank Plc: $ 2.1 billion Citibank: $ 1.9 billion Bank of Baroda: $ 1.8 billion

Bank Saderat Iran: $ 1.7 billion BNP Parabas: $ 1.7 billion Lloyds: $ 1.6 billion The Associated Press has additional details. Bloomberg notes that Dubai's default might increase risk aversion of investors to emerging markets: Were bound to see a rise in risk aversion, Arnab Das, the London-based head of market research and strategy at Roubini Global Economics said in an interview. The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they cant make all the excesses simply disappear. Indias stocks, currency and bonds fell on concern investors may shy away from riskier emerging market assets over losses stemming from the turmoil in Dubai. Indias benchmark stock index dropped 1.3 percent yesterday, while the rupee lost 0.5 percent. Zero hedge also notes:

UBS speculates that (among other possibilities) $80-90 billion (which is already over 100% of GDP) may be a low figure for Dubai's debt and that significant "off-balance sheet" amounts might explain the restructuring attempt The Dubai government is on holiday (Eid Al-Adha) until December 6th Abu Dhabi's Sovereign Wealth Fund (generally thought to command upwards of $500 billion) may have significantly less available. (Rumors of $125 billion in 2008 losses abounded last year). Bloomberg quotes sources to the effect that Abu Dhabi SWF's AUM has been "overstated, sometimes by as much as 100 percent."

British prime minister Gordon Brown has indicated how serious the situation is: "Clearly the restructuring announcement has caused disruption and uncertainty in world markets, Browns spokeswoman Vickie Sheriff told reporters in London. Browns view is that U.K. banks are well capitalized having undergone rigorous stress testing, she said. And the Associated Press is asking whether Dubai's default will cause another financial panic. The numbers involved are not that great for most creditors - on the order of

hundreds of millions of dollars. But the sense of shock and loss of confidence - when many had optimistically believed that the world economy was out of the woods - could indeed be profound. Global Research Articles by Washington's Blog

ARTICLE 2: The Dubai Crisis - An explanation

The saying some years ago was, "If the US sneezed, the world caught cold". Looking at the developments filtering out of the Middle East in the past few days, it is fair in saying, "If Dubai sneezes, the world catches cold." But the dominoes effect of Dubai on other economies has forced me to say that it is a bit of a VIRAL! First, for all of you who have been wondering what the fuss is all about, let me put things in right perspective Dubai World, an enterprise associated with the Government of Dubai, has asked its creditors to hold off on their repayment schedules. The finance on stake A whopping $80 Billion Dollars! Why did the Dubai economic crisis ever happen? Dubai has been perennially known to be the most Un-Gulf state. It doesn't rely on oil as a key driver for its economy. Instead, during its heydays between the late 1980s right until 2005, Dubai relied on tourism, real estate and commerce for driving its economy. People who lived in Dubai during these times, witnessed the transformation of what was an absolute Sand dune to a city where everyone wished to live in! All of this had to come with its own set of pitfalls. The ambitious plans of the Dubai Government, spearheaded by Shaikh Mohammed bin Rashid Al Makhtoum to set up dream ventures at exorbitant prices had to meet with an anti-climatic end. And it did meet one, in the form of the global recession! The global recession meant one thing Dream initiatives like the Palm Islands and the Seven Oceans had very few takers, by the time they went live. These projects also had the backing of the Government of Dubai. Now, with not many people willing to spend their monies (Actually, they didn't have a lot on their hands), these properties stood half-empty. With not many units of these ventures finding customers, developers started to default on their payments back to their creditors. And this is where, Dubai World finds itself in a mess! It was just unable to find people to buy their ventures, or units in their ventures.

Global recession bought with it, a downward spiral in the prices of real estate in Dubai, but only to the tune of about 15-20%. Some of these ventures were so exotic that they had to be priced relatively high, and obviously then, they had to go empty.

The impact on Dubai itself Layoffs The already reeling construction industry could see a major freefall from here. Laborers could be asked to go home and whatever little construction projects would be on the anvil, will surely be shelved. Banking Local banks would surely feel the pinch of this crisis. Though, they have pledged their support to Dubai World, there could be a time not too far off from here, when they might be in the red. Bullion prices Gold may see a big drop in demand. Dubai has been known to be a Gold Hub, and though it doesn't produce Gold on its own, it seeks exports from countries like India and re-exports them to other countries, prices can be expected to go down surely. Crude Oil The crude oil prices could go down too. Foreign Exchange The valuation of AED (The local currency of Dubai) could see a drop. This could probably mean the strengthening of the Dollar, by a bit. Summary All in all This is nowhere as catastrophic a disaster as the Sub-Prime Crisis or even the Lehmann bust. The Lehmann bust was surely a systemic malady, while Dubai World is probably in a mess due to cash-flow mismatch. The next week's events could probably dictate, which way Dubai is heading to! ARTICLE 3 The Dubai Financial Crisis An Oasis of Debt The Palm Islands, Dubai World and the Burj Khalifa

Feb 13, 2010 Jeff Jones Dubai continues to struggle with the debt from massive construction projects. A $10 billion rescue package from the UAE Central Bank has bought some time. Is it enough? Rising from the desert sands, seeming to pierce the very heavens above, the Burj Khalifa glimmers under a clear blue sky. Dwarfing the massive skyscrapers that make up the profile of the city skyline, this post-modern jewel towers over the desert oasis that is the city of Dubai. From the Palm Islands to Dubai World, the man-made islands rising from the waters of the gulf, to the world's tallest skyscraper, the Burj Khalifa, Dubai has been building the dreams of men. But there is trouble in paradise. Dreams are a fleeting and expensive thing. Though Dubai has proven that such wonders can indeed be dragged into reality, more often than not they have to be brought in kicking and screaming.

Dubai World According to a Bloomberg Press article by Arif Sharif and Laura Cochrane from Nov. 26, 2009 the cost of these projects has been astronomical. Dubai World, a set of man-man islands laid out to look like a satellite view of the entire globe, has some serious financial problems. Dubai said in an email statement that its state controlled Nakheel Company would ask creditors for a standstill agreement so it could extend the maturity of bond dates on the $59 billion worth of liabilites accumulated during the construction boom. Rachel Ziemba, a senior analyst at New York based Roubini Global Economics, told Bloomberg, "Extending the maturity of Nakheel debt is feeding the market's uncertainty on which debt Dubai will honor in full. They look desperate and the market is concerned that in the long term Dubais indebtedness is rising not falling." So what happened to this desert playground of the super rich? Dubai has been under a full throttle expansion for quite some time. Massive spending on construction has only seen debt grow and multiply. Fears continue about the country's ability to repay this debt. The main issue is a lack of transparency. Emad Mostaque, an equity-fund manager for Pictet Asset Management Ltd., a London-based fund with $100 billion invested globally, told Bloomberg Press, "There is no clarity about what exactly is happening. They have to clarify if there is going to be a voluntary rollover or if there is going to be a forced rollover. If there is a forced rollover it will mean technical default. If they dont clear this up then the whole market will want to sell." The United Arab Emirates has pledged support for the ailing economy of Dubai. The central bank has put up $10 billion dollars to help ease the mounting fears of Dubai's debt default. In the article 'UAE Central Bank Moves to Help Dubai' by Alistair Dawber, the details of the rescue financing brought relief. Peter Sands, Britain's Chief of Standard Chartered Bank said, "The UAE central bank has acted decisively and pragmatically in announcing new liquidity measures today. Their support for the banking system will underpin consumer and market confidence in the economy. We are confident that Dubai, and the UAE as a whole, will work through these issues and continue to prosper as a dynamic and vibrant part of the world." The Burj Khalifa The problems continue on other fronts. The 2,716.5 ft, $1.5 billion Burj Khalifa, officially opened in January of 2010, has had some growing pains of its own. According to the official website, ticket sales for a chance to take in the view from the 124th floor observation deck are temporarily unavailable due to maintenance. A Feb. 9, 2010 Telegraph.co.uk article by Richard

Spencer pin-points the maintenance issue as an electrical problem. "Technical issues with the power supply are being worked on by the main and sub-contractors and the public will be informed upon completion," according to the statement issued by Emaar, the company that built the tower. The Burj Khalifa is host to offices, residences and the Burj Armani Hotel. Rooms at the Burj Armani Hotel were designed by Giorgio Armani and are filled with furnishings from a special collection by Armani/Casa. 160 rooms and suites occupy several floors, making the Burj Armani Hotel a luxurious destination for those who can afford it. Shortly after the grand opening of the tower, UAE thrill seekers Nasser Al Neyadi and Omar Alhegelan of the Fazza Sky Team executed the highest building base jump in history from the top of the Burj Khalifa. The jump, officially sanctioned by UAE, Emaar Properties, was a world record vertical descent of 2,205 ft. Mr. Ahmed Al Matrooshi, the Managing Director of UAE, Emaar Properties, told the official Burj Khalifa website that the world record jump, "compliments Burj Khalifa's accomplished track-record of pushing frontiers." Indeed. The Future of Dubai On Feb. 9, 2010 CNN reported that Dubai is considering a sale of state property including one of the most famous ships in the world, the QE 2 (The Queen Elizabeth II). The investment arm of the emirate, Istithmar World, is said to be contemplating the sale in a effort to restructure their debt financing. Istithmar World has yet to respond to these rumors. The Burj Khalifa, Palm Islands and Dubai World are truly spectacular accomplishments. But at what cost? In the FT.com article Dubai Groups Line Up Asian Asset Sales by Sundeep Tucker and Simeon Kerr, it is reported that Dubai based business entities are still advertising to sell assets to help ease continuing debt obligations. Dubai World is trying to restructure some US$22 billion of debt. Emaar, the company that built the Burj Khalifa, is looking to sell off assets as well. Dubai Holdings is shopping around its 40 per cent share in Malaysia's Bank Islam. While none of the parties involved in these potential transactions would comment, Dubai Holdings has said that there had been a lot of speculation about asset sales but "there is nothing concrete to hand." The global financial uncertainty of the new millenium continues.

ARTICLE:

Dubai debt crisis: Now British banks face fresh crisis after investing billions Liz Hazelton

Barclays, RBS and HSBC face losing billions Wall Street plummets by 2 per cent after late opening FTSE falls by 1.5 per cent before stabilising Banks see 14billion wiped off market value in one day Dubai may consider selling QE2 to tackle debt

British banks were teetering on the brink of a fresh meltdown today after it emerged they had invested heavily in crisis-hit Dubai. An $80billion debt default in the emirate has already reawakened the spectre of a global 'double dip' - that the first shoots of recovery could be wiped out by a second wave of recession. But the level of exposure that the crippled British banking sector faces is now under renewed scrutiny. The crisis was prompted by Dubai World, the development company behind three palm shaped islands as well as an off-shore replica of the globe , defaulting on its debt. Today it emerged that:

Royal Bank of Scotland (RBS) was Dubai World's biggest loan arranger since January 2007, according to JP Morgan HSBC has an estimated 9.6billion in loans and advances to UAE customers Barclays has an exposure of around 3billion

Another bailout? Gordon Brown (right) meets Dubai's ruler Mohammed bin Rashid Al Maktoum at Downing Street earlier this week The figures are particularly alarming as the sector has had to be bailed-out by the tax payer on a number of occasions over the last year-and-a-half Earlier this month, RBS and Lloyds Banking group received another 50billion to keep them afloat RBS - which has received the biggest state rescue anywhere in the world - is now effectively owned by the taxpayer. As the money markets continued to falter, Gordon Brown moved to dispel investors' panic, claiming that he believed British banks were 'well-capitalised'. Speaking at the Commonwealth summit in Trinidad, Mr Brown said: 'I think we will find this is not on the scale of the previous problems we have dealt with.' Asked if the Dubai situation could spark a 'double-dip' recession, he said: 'You are obviously going to have setbacks with a bank here or an organisation there which has had problems, but I do believe the world has a better way of monitoring what is happening, so we can be sure that despite setbacks - we will continue to go forward.'

Enlarge Under construction: While the world's tallest tower the Burj Dubai nears completion, many ambitious building projects have come to a standst

Abandoned: A filthy car left behind at Dubai airport after its owner became one of many ex-pats who fleeing the country after the bubble burst Stock markets around the world have endured another turbulent 24 hours. Wall Street plummeted 2 per cent when it opened at 2.30pm GMT this afternoon. In London, the FTSE fell around 1.5 per cent first thing after a 3 per cent fall yesterday wiped almost 44 billion from blue-chip stocks. The index recovered its poise to stand 0.5 per cent lower after the first hour of trading. It was at 5188.73 at 12.45pm, down from 5194.13 at start of trading this morning. In Frankfurt, the Dax index fell 1.32 per cent to 5,540.34 while in France, the CAC lost 1 per cent to 3,639.66. Asian markets were also under pressure overnight as Hong Kong's Hang Seng fell more than 5 per cent and Japan's Nikkei was 3 per cent lower. Banks worldwide saw 14billion wiped off their market value yesterday. Dubai's rulers have done their best to calm fears, claiming the situation was under control. Sheikh Ahmed bin Saeed al Maktoum, the uncle of Dubai's ruler Sheikh Mohammed bin Rashid al Maktoum, said: ''Our intervention in Dubai World was carefully planned and reflects its specific financial position. 'The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react. 'We understand the concerns of the market and the creditors in particular. 'However, we have had to intervene because of the need to take decisive action to address its particular debt burden.' There were reports today that the emirate may consider selling the QE2, bought for $100million in 2007, to tackle some of its debt.l

Enlarge Emirati traders react as they monitor data on screens at the Dubai Financial Market yesterday

A man in front of a Korea Composite Stock Price Index in Seoul this morning Much of the debt default falls on Dubai World, which owns property developer Nakhell. As of August, the conglomerate had $59billion of liabilities which it now hopes to avoid redeeming for six months. Analysts had expected that the Dubai's oil-rich neighbour Abu Dhabi would offer financial support.

But Dubai may have to abandon an economic model that focused on developing swathes of desert with foreign money and labour. Even the prospect of an Abu-Dhabi-backed bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March. Tokyo traders have already dubbed the development Financial Crisis Part II. 'The panic button's been hit again,' said Francis Lun, general manager of Fulbright Securities in Hong Kong. 'The biggest worry I have is whether this will trigger a repricing in the overall emerging market,' said Arthur Lau, a fund manager in Hong Kong with JF Asset Management. 'This an important reminder that the credit crisis is forgotten but not gone,' Robert Rennie, strategist at Westpac Global Markets Group, said in a note. Asian banks, like their European peers, scrambled to distance themselves from Dubai, a desert emirate that emerged from dusty obscurity to invest in global lenders such as Standard Chartered and lure fund managers with the promise of a tax-free lifestyle.

Bursting the bubble: The launch of Atlantis hotel (above), on one of the palm islands (below) last November was an extravagant celebration of Dubai's ambitions

The nerves showed in credit markets, at the centre of the financial storm triggered by the Lehman Brothers' bankruptcy last year. Asian credit default swaps, used to insure against default, were at their widest in a month, with the Asia ex-Japan iTraxx investment-grade index touching 124/129 basis points. Dubai's credit default swaps were being quoted as high as 500-550 basis points, some traders said on Thursday. Dubai's debt problems are a hangover from a property bubble that imploded after the financial crisis derailed its plans to become a magnet for tourists and a regional hub for everything from shipping to entertainment. Banks' exposure to a Dubai default pales in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates U.S. and European lenders will have to make between 2007 and 2010 as a result of the credit crisis. 'Similar stories to the one in Dubai are likely to come out, leading risk money to pull out from assets such as commodities and stocks,' said Takahiko Murai, general manager of equities at Nozomi Securities in Japan. Japan's biggest bank Mitsubishi UFJ Financial Group fell as Japan's Nikkei average struck a four-month closing low. It also came under pressure from weak exporters after the dollar hit a fresh 14-year low against the yen. The Australian and New Zealand dollars retreated. Shares in HSBC Holdings, one of the bookrunners on an outstanding $5.5 billion Dubai World loan, dropped more than 7 per cent and Standard Chartered losses topped 6 per cent.

The London listed shares of the two lenders led the biggest tumble in European bank stocks in six months on Thursday.

Will Dubai Default Sink International Islamic Bonds Market?

Dubai's debt woes are bringing the world's attention to the Islamic finance, particularly the Islamic bonds known as sukuk. Sukuk are Sharia-compliant bonds that do not pay interest. Instead, the sukuk sellers pay the debt holders a share of the rent or capital gains from non-cash physical assets or share of the profits earned from businesses purchased with the money raised. Unfortunately for the Nakheel sukuk holders, the real estate bubble in Dubai that promised big gains from rents and sales has collapsed. And the Islamic bond holders are facing the possibility of a major default, resulting in a dramatic sell-off of sukuk in the last few weeks. According to Data Explorers, a company that tracks how much of a company's stock or bonds are out on loan, about 75% of institutions holding the sukuk sold their position between the end of August and the end of November. "It's an extraordinary sell-off in a bond so close to maturity, when there was no indication of a problem refinancing. The data suggests they had some information that it was a good time to sell," said Data Explorers managing director Julian Pittam. Dubai's recent request for a debt standstill for Nakheel, one of its biggest state-owned companies, has raised the possibility of the largest Islamic bond or "sukuk" default on record, raising alarms in the global Islamic debt markets. Nakheel, the Dubai developer behind many of the Emirate's high-profile projects, has to find $4bn to repay sukuk by the middle of this month, according to a report in Financial Times. If Nakheel doesn't get creditors to agree to a stay on their claims, the Dubai company could be declared in default after Dec. 14, 2009. A group of the sukuk holders, including New York-based hedge-fund firm QVT Financial LP, have appointed London-based law firm Ashurst to represent them in the matter, says the Wall Street Journal. A December 2006 report on the Nakheel sukuk sale in Euroweek, a trade publication for capital markets, said about 100 accounts bought the notes. Of those, more than half were banks. By geography, about 40% of the issue was placed in the Middle East and 40% in Europe.

Beginning modestly in 2000 with three sukuk issuers collectively worth US$336 million, the Sukuk bonds exceeded $75 billion last year. Issuance of sukuk - both in domestic and foreign currencies - has been quite common in some countries. The most active issuers of sukuk in the past year include Malaysia, the UAE, Saudi Arabia, Pakistan, Kuwait and Bahrain. The potential Dubai default is likely to negatively affect nations in Asia and the Pacific region planning to raise money by offering sukuk. Indonesia, Pakistan and South Korea are planning to sell Islamic bonds offshore in separate offerings. Jakarta plans to sell up to $1 billion of global sukuk by the second quarter of 2010, according to people familiar with the situation. Pakistan, the only other Asian nation to have issued offshore Islamic bonds, has just $600 million outstanding from its 2005 sale. It is looking to raise $500 million in Islamic bonds next year. The Karachi city government is preparing to issue $500 million in municipal sukuk by February, 2010, a Pakistan finance ministry official said in September this year. South Korea is looking to sell what would be its first ever sukuk as it continues to refine its tax laws to facilitate issuance. It wants to attract capital from Islamic nations to diversify its funding sources and reduce its refinancing risks. The Korean government has been planning a road show in Malaysia and the United Arab Emirates. Since the start of this year, $8.1 billion of Islamic bonds out of the Asian-Pacific region have

priced, exceeding the $6.4 billion volume in the same period last year, according to data provider Dealogic. Last year's global economic crisis brought attention to Islamic finance as an alternative for both Muslim and non-Muslim customers. In an article, the Vatican newspaper Osservatore Romano voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service, the Osservatore Romano said. Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral. Sukuk may be used to fund the "car industry or the next Olympic Games in London, the article said. Investors have been attracted by Islamic banking's more conservative approach: Islamic law forbids banks from charging interest (though customers pay fees) and many scholars discourage investment in excessively leveraged companies. Though it currently accounts for just 1% of the global market, the Islamic finance industry's value is growing at around 15% a year, and could reach $4 trillion in five years, up from $500 billion today, according to a 2008 report from Moody's Investors Service. The unfolding debt crisis in Dubai is the severest test yet of the short life of the Islamic debt markets. The process and the outcome of the ultimate resolution of the debt crisis in the tiny Gulf Emirate will have a lasting impact on the future of entire global Islamic finance.