B of A: "Dubai Crisis May End in ‘Major’ Default..."

Bloomberg, here

"... Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.

“One cannot rule out -- as a tail risk -- a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzerwrote in a report.

A default would lead to a “sudden stop of capital flows into emerging markets” and be a “major step back” in the recovery from the global financial crisis, they wrote.......

‘Best-Case Scenario’

“In a best-case scenario, this will remain limited to a Dubai corporate sector problem, with either some bailout from UAE authorities or a market-friendly debt restructuring,” they wrote.

Bank of America estimates that Dubai’s debt totals $88 billion, and that its external debt equals 103 percent of gross domestic product, according to a separate report.

South Korea’s won lost 1.7 percent, the biggest slump among 25 emerging-market currencies, followed by the Philippine peso...."