Abu Dhabi Sinks $10B Into Dubai

Dubai markets soared today on news that the troubled sheikdom has received $10 billion in financing from neighbor Abu Dhabi. The funds come just in time for $4.1 billion to repay an Islamic bond of Dubai World's real estate arm, Nakheel, which matures today. The remaining money will be used to pay creditors and contractors of debt-laden Dubai World through April 2010 and to prop up local banks.

A bounce from the news was seen not only in Dubai, where the main index opened up 10%, but also in Abu Dhabi, where shares closed up 7.9%, the Wall Street Journal reports. Nakheel's bond has been seen as a litmus test for Dubai's ability to repay its staggering $80 billion debt, and Abu Dhabi "saw the adverse market reaction to Nakheel debt restructuring news play out over several days and perhaps decided they had seen enough," a regional finance expert said.