When an Arabian consortium bought the Peninsular & Oriental (P&O) ports company three years ago, American politicians went into uproar over the perceived terrorist threat. It emerged this week, however, that the bombshell the world should have been worried about was the debt that the group was taking on to fund its growth.
The Government of Dubai said on Wednesday that it was seeking a standstill on debt repayments for Dubai World, the vast conglomerate that bought P&O (minus the American ports) for £3.9 billion in 2006.
Dubai World has liabilities of $60 billion (£36 billion) and the standstill announcement, made just before most of the Arab world stopped work for the Eid religious festival, has stunned stock and credit markets.
The standstill raises the possibility that Dubai World could default on its debt. The fear in Western markets is that banks risk losing billions, causing more paralysis in the lending markets.
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