Yesterday, the government of Dubai announced its launch of a $20 billion bond program to fund its various financial commitments and spending programs. The first tranche of the issue, in the amount of $10 billion (or 50% of the bond program), was subscribed to by the United Arab Emirates (UAE) central bank. The bonds sold to the UAE central bank are unsecured, mature in five years, bear interest at 4% per annum and are intended to provide Dubai with necessary liquidity to meet upcoming financial obligations. This move comes after much speculation regarding whether the UAE federal government, based in the emirate of Abu Dhabi, would step in assist Dubai's struggling economy.

In the past few months, Abu Dhabi and Dubai have faced financial strains due to declining oil prices and real estate values. Just last week, Borse Dubai, the government-owned exchange group, announced that it had finally obtained refinancing of its $3.8 billion loan used to fund its investments in NASDAQ OMX Group and the London Stock Exchange. Furthermore, earlier this month, Abu Dhabi injected AED 16 billion (approximately $4.4 billion) into its five largest banks. Finally, the UAE government has made up to DH120 billion (approximately $32.7 billion) available to banks in all seven emirates, and has agreed to rescue two of Dubai's mortgage companies, Amlak and Tamweel.