Sunday, Aug 07, 2016

Dubai: A recovery in oil prices helped the spreads of UAE credit default swaps (CDS), or cost of insuring Gulf risk, with most of them tightening by 2-10 basis points.

Oil prices gained nearly 5 per cent last week, recovering swiftly after entering into a bear market zone. CDS spreads mostly follow oil prices in the region, from which some of the countries derive majority of its revenues from.

Five-year Abu Dhabi CDS (Credit Default Swaps) tightened by 3 basis points on week to be at 81 basis points, while 5-year Dubai CDS also tightened by 2 basis points to be at 169 basis points.

“We expect oil prices to improve, so CDS spreads would continue to tighten,” said Anita Yadav, head of fixed income at Emirates NBD.

Analysts expect the recent slump in oil prices to below $40 (Dh147) per barrel due to better demand and supply fundamentals. Qatar 5-year CDS fell 3 basis points to be at 110 basis points, while Saudi Arabia’s CDS also fell 3 basis points to be at 184 basis points.

By Siddesh Suresh Mayenkar Senior Reporter

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