...slip into the sea, eventually.
It's probably too late now, but you might take a peek at the international pocket of your portfolio after downing your Thanksgiving turkey and stuffing. As reported all over the news today, the government of Dubai is proposing to delay debt payments, which risks “triggering the biggest sovereign default since Argentina in 2001,” according to Bloomberg.
The news hit European markets hard, as exchanges there experienced their worst trading day since April.
Since U.S. Markets are closed for Thanksgiving, we can only guess what shape the markets will be in when they reopen.
So, in browsing your portfolio – and those of mutual funds you might hold – what companies are directly implicated by this? DP World, the shipping company, is certainly one. It is publicly traded, with only 77% owned by the government of Dubai. To my knowledge, most of the other Dubai holdings are wholly-owned and not publicly traded.
However, there will be a ton of creditors with exposure to the situation, and you will want to watch the situation carefully. Many of the banks so exposed are already struggling to maintain adequate levels of capital even as they write down or write off the value of their loan portfolios and other, more exotic securities on their balance sheets. Bloomberg reports:
“The biggest creditors are Abu Dhabi Commercial Bank and Emirate NBD PJSC. Other lenders include Credit Suisse Group AG, HSBC Holdings Plc, Barclays, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, according to a person familiar with the situation.”
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