Dubai rallies as debt deal seen near

Moody's downgraded seven Abu Dhabi-linked firms last week, citing a lack of an implicit government guarantee.

Dubai World is in talks with a panel of seven major creditors, which include HSBC , Standard Chartered , Royal Bank of Scotland as well as local banks, Emirates NBD and Abu Dhabi Commercial Bank .

ADCB is the most exposed to Dubai World among Abu Dhabi lenders with $1.9 billion outstanding.

Unlike Emirates NBD, which is 56-percent owned by Dubai's sovereign wealth fund and may be more likely to accept a deal, ADCB may fight as the representative bank from Abu Dhabi.

Dubai is expected to make a formal proposal to creditors before announcing its intentions for a $980 million Islamic bond or sukuk issued by Nakheel, which comes due in May.

Abu Dhabi helped Dubai avoid an embarrassing default on another Nakheel sukuk but a debt swap is seen as the most likely option this time.

(Additional reporting by Sebastian Tong in London)

(Reporting by Stanley Carvalho; Editing by Thomas Atkins)