Fund managers have criticised both the timing and the wording of the Dubai authorities' plans to restructure its debt as well as the fact that, unusually, it was released by a law firm on behalf of the government.

The global markets have been spooked by the possibiliity of the emirate defaulting, prompting a dash to safe haven asset classes.

A statement from a Dubai ministerial office issued through the solicitors said that Dubai World, the emirates' biggest state-run company, 'intends to ask all providers of financing to Dubai World and Nakheel [a Dubai World subsidiary] to a 'standstill' and extend maturities until at least 30 May 2010.'

Jeremy Brewin, manager ofthe $640 million Aviva External Debt fund, says this unusual practice and the timing, a day before Ede and on Thanksgiving in the US, left a lot to be desired.

'Assuming it was released as a last minute measure before the Islamic holiday of Ede, this sounds more like language of a loan document than of the bond market. You just would not use the word "standstill" when talking to bondholders,' he says.

Investors presumed that the recent $5 billion loan extension to Dubai by Abu Dhabi, a sister state and one of the seven emirates in United Arab Emirates, was partly to pay off the $3.25 billion Nakheel bond maturing next month. However the statement that Dubai World was looking to restructure some of its debt has put this assumption into doubt.

Brewin, whose fund does not own any Dubai related debt, says the bond markets arenow looking for clarity in regards to the forthcoming payment.

He adds: 'The language of the next statement is very important. It has to come directly from Dubai, though the $5 billion loan extension shows how quickly Abu Dhabi can react to immediate payments.'