Publications
Publications
- June 2010 (Revised July 2012)
- HBS Case Collection
Dubai: Debt, Development, and Crisis (C)
By: Aldo Musacchio, Andrew Christopher Goodman and Claire K. Qureshi
Abstract
On November 25, 2009, the city state of Dubai stunned markets by announcing that Dubai World, its flagship state holding company, would seek a six month "standstill" on at least $4 billion U.S. dollars of its $26 billion in debt obligations. This case describes Dubai's development strategy in detail and narrates how, as part of that strategy, a series of state-owned holding companies accumulated billions of dollars in debt. The A case ends as Sheikh Ahmed bin Saeed, chairman of Dubai's Fiscal Committee, has to decide what to do about the financial troubles of Dubai World and other state-owned holding companies. The case presents Sheikh Ahmed bin Saeed having to decide among three options: The Dubai government can guarantee the debt, they can renegotiate the debt, or walk away (i.e., default). The B case describes the decision and the reactions to this decision around the world and presents a new decision on the part of bond holders of Dubai's state-owned holding companies. The C case briefly analyzes the advantages and disadvantages of Dubai's bankruptcy procedures, both for investors and for the holding companies of Dubai.
Keywords
Finance; Investment; Emerging Markets; Trade; Insolvency and Bankruptcy; Development Economics; Financial Crisis; State Ownership; Sovereign Finance; Business Strategy; Dubai
Citation
Musacchio, Aldo, Andrew Christopher Goodman, and Claire K. Qureshi. "Dubai: Debt, Development, and Crisis (C)." Harvard Business School Supplement 710-071, June 2010. (Revised July 2012.)