Even Dubai Says It Won't Bail Out Dubai World

The government of Dubai will not bail out Dubai World, an official said this morning.

That's really bad news for creditors hoping that the ultra-wealthy Abu Dhabi would bailout Dubai World, the troubled Persian Gulf company that last week announced it would seek a six month reprieve on its $60 billion of debts. There's no way Abu Dhabi will rescue the company if even Dubai refuses to step in.

Many creditors seemed to have assumed that there was some kind of implicit guarantee of the Dubai World debt from the United Arab Emirates. The message from the last few days is that this assumption was wrong.

Here's the AP's report on the statement from Dubai:

DUBAI, United Arab Emirates — The heavily indebted Dubai World is not guaranteed by the emirate's government, a top financial official from the city state said Monday, offering little direction to anxious investors on a day when the United Arab Emirates registered a record fall on the back of Dubai's debt mess.

On the first day of trading since news of Dubai World's debt crunch became public, Dubai's main stock exchange dropped more than 7 percent while the Abu Dhabi exchange fell more than 8 percent — the steepest fall in at least a year, according to brokers.