The government-owned company, Dubai World, has reassured investors abroad by revealing details of its restructuring plans, nearly a week after hinting it may not have enough money to repay its debts.
Dubai World says it will restructure $26 billion in debt, less than half of the nearly $60 billion it owes.
The new scheme will look at options for deleveraging, including asset sales, and will apply to the conglomerate's main property firms, Nakheel and Limitless. Its smaller companies will not be covered.
The head of Middle East research at Swiss-based financial firm UBS, Saud Masud, says it is a step in the right direction.
"I think, structurally this is a long-term positive with some short-term pain," Masud said.
Asian and European stocks were up, Tuesday, following news of the restructuring. However, it was a different story back in the United Arab Emirates, where the main indexes in Dubai and Abu Dhabi fell shortly after opening.
Both were down by about six percent, after recording even higher losses on Monday.
Masud says the situation has most people in the UAE feeling vulnerable.
"If you walk around and look at what the everyday person is thinking," Masud said. "They're clearly concerned with what restructuring or what type of debt renegotiation, will mean for them and their companies."
Dubai World helped transform Dubai into a regional hub for finance. It sent markets across the planet tumbling, last week, when executives asked creditors for a six-month extension on repaying its debts.
Monday, the emirate's government announced it would not provide the company with a bailout.
Officials say they want to set the record straight that, although Dubai owns Dubai World, the company is independent and not guaranteed by the government.
Dubai World's debts grew from projects initiated during Dubai's property boom, including man-made islands in the shape of palm trees and the world's tallest building.