Dubai default looms, may be largest sovereign default since Argentina in 2001

No one saw this coming … From Bloomberg: Dubai Debt Delay Rattles Confidence in Gulf Borrowers

Dubai is shaking investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001. … Moody’s Investors Service and Standard & Poor’s cut the ratings on state companies yesterday, saying they may consider state-controlled Dubai World’s plan to delay debt payments a default. The sheikhdom, ruled by Sheikh Mohammed Bin Rashid Al Maktoum, borrowed $80 billion in a four-year construction boom …

And a few articles from the WSJ: Dubai Starts to Untangle Dubai World Fallout
And European Banks Seen Exposed To Dubai World

Most banks on Thursday said their exposure to Dubai and Dubai World is small or declined to comment, but Credit Suisse analysts estimate European banks have about $40 billion in exposure to debt issued by various Dubai city-state entities, including Dubai World.

And from December 2008: Citi Voices Upbeat View on Dubai (ht jb)

With questions about Dubai’s looming debt obligations swirling, Citigroup Inc. said it had raised $8 billion for the Persian Gulf city-state over the course of the past year and still had a positive outlook on its economy. Citigroup Chairman Win Bischoff was quoted in the bank’s statement Monday as saying Citigroup continues to see Dubai as among its “most significant markets.”

When there are bad loans to be made, apparently Citi never sleeps. …