Dubai: The news that Abu Dhabi had pledged $10 billion (Dh36.7 billion) to support Dubai with its debt restructuring came as good news for investors.

Shaikh Maktoum Hasher Maktoum Al Maktoum, CEO of Al Fajer Group, who had bought bonds while everyone else was selling, is one of the few who made "significant returns."

"When I bought this bond, my decision was based on market dislocation. I made my decision by sticking to and following market fundamentals," Shaikh Maktoum told Gulf News.

Shaikh Maktoum bought three of Dubai's bonds — Emirates, Nakheel and Dewa — on the first day of trading following the Eid break and the announcement that Dubai World was looking to restructure its debt repayments.

"If you look at the initial statement, all it said was that Dubai World was asking to reschedule but many assumed it had already defaulted," he said.

"If you compare the gross foreign debt of countries, you'll see that the UAE is in a healthy position compared to the rest of the world."

Good news

Amir Sadr, head of the Middle East Wealth Management business for Merrill Lynch, believes that this also comes as good news for the confidence of foreign investors. "If you look at the announcement that came out a couple of weeks ago, it took a lot of investors by surprise because the guidance that we were getting wasn't really leading to that. But I think the demonstration that Abu Dhabi is somewhat of a backstop to some of the issues, but more importantly the announcement that new laws would soon be introduced to promote transparency and more protection for creditors are the exact two things that foreign institutions have been looking for."

"The announcement that the remainder of the funds will be used to pay contractors and creditors is also very good news for the growth prospects of Dubai offshore investors," Sadr added.

Restoring confidence

The $10 billion offered by Abu Dhabi to support Dubai in paying part of the debt of one of its conglomerates was described by the chairman of the Union of Arab Banks, Adnan Ahamad Yousuf, as a good move.

"The Abu Dhabi initiative is enough to restore investors' confidence in the Dubai market and the UAE," he told Gulf News. The move came at the right time and $10 billion will enable the restructuring of Dubai World debt, Yousuf added.

"Dubai is part of the UAE and together with Abu Dhabi support they will take appropriate steps to restructure the debt of Dubai World and create an effective dialogue with the creditors."

He said, "Dubai's decision is a logical one in trying to manage its debts as the world suffers from the economic meltdown,"

Yousuf believes what happened with Dubai is not a weakness and could happen anywhere worldwide.

The Dubai Government will overcome the current short-term challenges with appropriate measures that are already underway and people are still looking at Dubai as a big business centre, Yousuf said.