Whilst all of what grizzled wrote is true- I wouldn't call it balanced.
Moving on...
I see the actual problem is in the way forward. This pending default is not on an interest payment- DW has been unable to refinance that particular bond. It is not the first time, it is just the first time that they have had to tell everybody that AUH might not come to the party. So, as more bonds fall due, the emirate clearly doesn't have the income to repay them (there is no real tax base). How does Dubai intend to proceed in the future? This is what all the ructions are about. Not that a govt owned enterprise can't repay a $3 billion debt (which is small potatoes in the govt debt world).You have four options when a debt falls due:
1. Use income (that you have accumulated) to repay the debt in whole
2. Refinance all or part of the debt
3. Sell asets, either the security for the debt, or other assets to repay the debt in whole
4. Default on the debt (and let bankruptcy run it's course- which will naturally involve asset sales).
*sovereign nations have other options, but Dubai is not a 'nation' in that sense.
It appears that a lot of people think that AUH is going to act as a 'bankruptcy trustee'. Clearly the recent statements indicate this is what is going to happen- but they are warning that they are not going to cover all the paper, and that some entities will fail. Which ones? It seems obvious- and it is going to get very ugly. As to addressing this ongoing problem of lack of income- here is where it gets particularly gruesome. Widening of tax base (income) and trimming outgoings; this is going to be a very painful exercise, and a big cultural change. Weening a govt (and populace) addicted to credit growth.
I can't see any other way forward. Hence the ructions (especially as this process will by revisited every time another bond falls due).