Riad Kamal, chief executive of Arabtec ARTC.DU, said he had no doubt about Dubai's commitment to settle its debt.
"Dubai should be given time to restructure its debt. I'm not going to lose sleep over this issue," he said.
The crisis began on Wednesday when Dubai, part of the United Arab Emirates federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of palm tree-shaped islands that once attracted celebrities and the super-rich.
"I am very relaxed. Dubai has never defaulted and it will not default," Khalaf Al Habtoor, chairman of Al Habtoor Group, told Reuters by phone. "I am confident the government will meet its commitments and help the companies."
An executive at Emirates NBD ENBD.DU, one of the region's largest banks, also sought to minimise the impact, saying: "It's business as usual and there's nothing to worry about."
Nevertheless, Dubai's share index fell 5.9 percent in early trading, while DP World DPW.DI plunged 14.9 percent when UAE markets opened for the first time since the debt repayment delay was announced. Abu Dhabi's bourse also declined, losing 7.1 percent to 2,703 points.
The president of Emirates airline told London's Sunday Telegraph in an interview that he was shocked by the global fallout, but said: "Dubai will navigate itself out of this, as will we." He said the carrier would not be affected.
The English-daily Khaleej Times newspaper said the Dubai government had taken a hard look at the way Dubai Inc. operates, and will fix what has not worked.
"The need to restructure Dubai World is for real, and the decision to go ahead with it indicates maturity on the part of the emirate's decision-makers," the paper said in an editorial.
Khaleej Times defended the goverment from critics who said the announcement, made just before a four-day Eid al-Adha holiday, had undermined Dubai's credibility and transparency. "The timing of the announcement of a possible six-month delay in repaying the group's debt can be debated by market-makers, but not the intention behind it," it wrote.
OVERBLOWN
Some bankers and investors also believe last week's Dubai World restructuring announcement was blown out of proportion.
"The crisis itself has been exaggerated. It is very much localised in one sector and one group. It has been escalated to a much bigger issue," Suresh Kumar, chief executive of Emirates NBD capital said.
Ajman Bank AJBNK.DU, one of the UAE's smallest banks, said it would pursue its plan to open a Dubai branch in December.
"Since the start of the global crisis, this is not the first time a postponement has been announced in a world economy like Dubai," Ajman Bank's acting CEO Ali Alshaqoosh Al Mueen told Reuters. "The decision will certainly have been taken after a thorough review of all resulting benefits and outcomes."
Some executives at international banks active in the region also voiced confidence in Dubai.
Michael Geoghegan, HSBC Group chief executive, said in a statement at the weekend he was "confident that the leadership of Dubai and the UAE will overcome any short-term issues they face, which appear to have been somewhat sensationalised, and continue to lay the foundations for sustainable growth."
Amid a global financial-market rout, Dubai's announcement Wednesday that it would seek to delay debt payments represents the latest setback for the city-state's ruler, Sheik Mohammed bin Rashid Al Maktoum.
Last week's market mayhem was compounded by a lack of transparency from Dubai over the standstill request. A five-paragraph statement from the Dubai Department of Finance provided few details. A spokesman for the department said he couldn't comment further. A spokesman for the ruler's court didn't respond to a request for comment.
Sheik Mohammed bin Rashid Al Maktoum, front right on Nov. 15, was briefed as Dubai World's troubles emerged.
Late Thursday night, Sheik Ahmed bin Saeed Al Maktoum, a senior Dubai finance official and the chairman of the Emirates airline, said in a statement that the standstill announcement had been carefully planned and promised more details this week. "This is a sensible business decision," he said.
Over the last several decades, Dubai's debt piled up as government-related companies borrowed to fund development at home and acquisitions abroad. Bankers and credit analysts assumed government support from Sheik Mohammed -- and from the federal government in Abu Dhabi -- if they ever overextended.
But when the global financial crisis hit, foreign investors fled Dubai's property market, a pillar of the economy. Unease over Dubai's debt turned into global concern, and the cost of insuring Dubai debt against default started to rise sharply. Developers, many of them state-owned, saw their cash flow disappear. Buyers, who could put as little as 10% down, stopped paying installments. Builders started complaining about missed invoices.
In February, Dubai orchestrated a novel $20 billion bond program, of which the first $10 billion tranche was fully subscribed by the U.A.E. central bank.
Dubai said it would use the money to meet its own debt obligations and unpaid bills by developers. The U.A.E. offered more, but Dubai turned down the offer, according to one person familiar with the situation.
But just as investors started to breathe easier because of the big show of federal support, Sheik Mohammed dumped his new finance chief with no explanation.
Still, Dubai made its debt payments on time. In June, Dubai World, the biggest of Dubai's corporate entities, brought in restructuring outfit Alix Partners Ltd. to advise on an overhaul.
In mid-October, Dubai World said it would shed thousands of jobs and launch a major cost-cutting effort. Selling assets quickly wasn't a real option. Many of the company's businesses were still valuable but illiquid, according to a person familiar with the situation. The company wanted to avoid a fire sale, this person said.
Amid the restructuring effort, Sultan Ahmed bin Sulayem, the chairman, was aloof, according to this person. His deputy, Jamal bin Thaniah, appointed chief executive in October, took on a more active role, this person said. Mr. Sulayem hasn't responded to requests for comment. A spokesman for Dubai World said he wasn't available.
A $3.5 billion sukuk, or Islamic bond, was coming due in December. While Dubai World signaled in the spring that a debt restructuring was an option, investors and analysts continued to expect a bailout.
In a letter to employees of Dubai World earlier this month, Mr. Sulayem said the Dubai government had assured the company "full support as an iconic company serving its role in the government's vision for the future."
A Dubai World spokesman declined to comment on the letter, except to say the company would continue to communicate with staff about the restructuring. "A restructuring process has been under way for some time and it continues," he said.
Earlier this month, Dubai's top officials gathered for a meeting of Sheik Mohammed's royal court, according to a person familiar with the situation. At Zabeel Palace, surrounded by manicured gardens, statues of prancing horses, and flittering peacocks, Sheik Mohammed was briefed on the extent of Dubai World's troubles, this person said.
In the days that followed, Sheik Mohammed announced the removal of several top economic advisers from key positions. Then on Wednesday, Dubai announced it had raised $5 billion in debt commitments from two Abu Dhabi-controlled banks. Investors interpreted the move as another indication that the federal government would come to Dubai's rescue if needed. Two hours later, Dubai came out with its standstill announcement.
The sell-off was broad, with selling concentrated mainly in the financial and commodity-linked sectors as investors trimmed positions in areas of the market most sensitive to economic uncertainty.
That hit stocks like aluminum producer Alcoa Inc
But after a slide of more than 2 percent at the open, the flight to less risky assets seemed to be subsiding, helping the major U.S. stock indexes ease back up off their lows. The U.S. dollar, which had jumped sharply as investors looked for a safe haven, pared gains and commodity prices stabilized.
The news out of the Middle East coincided with the desire by many investors to lock in 20 percent year-to-date gains in the S&P 500 after a terrible year in 2008.
"It is at least an early indication of whether investors believe this is one-time bad news or the tip of something really bad," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Right now, it looks like investors are taking the optimistic stance."
The Dow Jones industrial average <.DJI> dropped 154.48 points, or 1.48 percent, to end at 10,309.92. The Standard & Poor's 500 Index <.SPX> fell 19.14 points, or 1.72 percent, to 1,091.49. The Nasdaq Composite Index <.IXIC> lost 37.61 points, or 1.73 percent, to 2,138.44.
For the week, the Dow dipped 0.1 percent, while the S&P 500 edged up 0.01 percent and the Nasdaq slipped 0.4 percent.
Volume was light on the day after Thanksgiving. The U.S. stock market shut on Friday at 1 p.m. (1800 GMT), which was three hours shy of its normal closing bell, but the number of declining stocks still towered over those advancing.
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