And it continues to happen!
Dubai Wants Billion-Dollar Debt Suspension
10:29pm UK, Wednesday November 25, 2009
Dubai is asking creditors to accept a six-month suspension on debt repayments for its severely cash-strapped conglomerate Dubai World.
The government of the Gulf emirate has also appointed consultants Deloitte to restructure state-run Dubai World's operations.
The group includes property developer Nakheel, which built one of the state's most ostentatious projects, the palm-shaped, man-made residential islands of the Palm Jumeirah.
The conglomerate also includes DP World, owner of the former P&O ports operator.
According to Nakheel, Dubai World has $59bn (£35bn) of liabilities, a large proportion of Dubai's total debt of $80bn (£47bn).
The emirate's government said in a statement: "Dubai World intends to ask all providers of financing to Dubai World and Nakheel to 'standstill' and extend maturities until at least May 30, 2010."
Dubai's economy was hit hard in the past year as the global credit crunch ended a six-year boom in the region and sent its once-flourishing property sector into decline.
Analysts expect financial support to come from deep-pocketed Abu Dhabi, a neighbouring member of the United Arab Emirates.
But most believe Dubai will have to abandon its flamboyant economic model, which focuses on heavy real estate investment and inflows of foreign capital.
Andrew Critchlow, managing editor of Dow Jones newswires in Dubai, told Sky News: "This hit everyone like a thunderbolt."
He explained: "Within five minutes of the story hitting the wires, I had bankers on the phone from London and New York wanting more information.
"No one expected this. People were getting signs that Dubai might be clawing its way out of the global financial crisis and could see a glimmer of hope on the horizon.
"This has really hit confidence. Bankers are very concerned now, they just don't know what to believe."