Dubai — To see how far Dubai has come, take a look at its credit default swaps.

The extra cost investors pay to insure the sheikhdom’s bonds versus those of its oil-rich neighbour Abu Dhabi has fallen below 60 basis points in August, for the first time on record. That is down from 555 basis points in 2009, when Dubai’s government-related companies were in talks to restructure billions of dollars in debt, and Abu Dhabi came to the emirate’s rescue with a bailout.

Dubai is a rare example of a Gulf economy that does not rely almost entirely on oil revenue to fund expansion. Wholesale and retail trade were the biggest contributors to GDP in 2016, followed by transportation and storage. That helped cushion the emirate’s finances from declines in the price of crude.

The same cannot be said for Abu Dhabi, which holds about 6% of the world’s oil supply and where crude contributed about 25% to GDP in 2016. Its credit default swaps have fallen four basis points in 2017, compared with a 30 basis-points drop in Dubai’s contracts.


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