[Update 1 adds memo requesting a trading halt on Nakheel's sukuk.] The Dubai government, Dubai World’s principal owner, asked creditors last week to delay repayments for at least six months while it restructures more than $60bn in debt, including billions from its real estate firm Nakheel. On Monday, Nakheel asked Nasdaq Dubai to halt trading on its three Islamic-compliant bonds -- called sukuk -- "until it is in a position to fully inform the market," according to a Nasdaq Dubai memo obtained by MarketWatch. Dubai World’s request for more time to repay creditors was a blow to market sentiment around the globe, and while investors wait to see if the United Arab Emirate (UAE)-controlled holding company will reach a deal before it defaults, concerns that its demise would cause systemic market failure seem to have subsided. HousingWire sources indicate domestic real estate investors expect to be cushioned from any shock waves in case of default, though counterparts in the Eurozone are more heavily involved in Dubai real estate projects. The business unit of Dubai World racked up debt on a number of grandiose land reclamation projects, including a man-made archipelago off the Dubai coast with islands arranged in the shape of the world’s major continental features. Nakheel has a $3.5bn convertible sukuk — essentially a convertible bond whose terms adhere to Islamic lending practices — that will reach maturity on December 14. Without the six-month extension, Dubai World would likely default on the deal. Dubai has little oil wealth relative to its neighboring emirates, and its economy is driven primarily through trade and tourism ventures. Initial reports indicated that the Dubai government, or Abu Dhabi, Dubai’s oil-rich neighbor state, would back the holding company in the event of a failure, but a government official said Monday that was not the case. “Dubai World was established as an independent company, it is true that the government is the owner, but given that the company has various activities and is exposed to various types of risks, the decision, since its establishment, has been that the company is not guaranteed by the [Dubai] government,” Abdulrahman al-Saleh, director general of Dubai's Finance Department, said on Dubai TV, according to The New York Times. Global stock markets declined after the news broke, amid concerns that companies that invested in Dubai World would experience losses, or even worse, that Dubai World’s situation could be the sign of impending doom for other countries with extensive debt. But the decline in the markets has cooled and some analysts believe even if Dubai World were to collapse, it would not cause a systemic failure. "It is likely to take at least a few days before the implications of the impact of a possible default from Dubai are properly digested but for the present it seems that the market is seeing this negative news as a blow to the global recovery but not one that will push it off course," said Forex.com research director Jane Foley, in a Associated Press report. The New York Times cited Bank for International Settlements data that shows foreign banks have $130bn of exposure to the UAE, 0.4% of foreign banks’ total cross-border exposure. Banks in the UK lead the world in exposure with $51bn and US banks hold $13bn debt. Dubai World’s largest creditors are domestic banks in Dubai and Abu Dhabi. Write to Austin Kilgore.