More forensics on the restructuring going on at Dubai World. Commentators expressed some alarm at the move to shift assets from Nakheel to Istithmar World, worrying that it was hollowing out the company and reducing the amount of collateral available to owners of Nakheel's $3.5 billion sukuk should the company default.

They're worrying for nothing.

A closer examination of the terms of the sukuk as laid out in the prospectus, reveals that the sukuk is unsecured. While backed by land assets in accordance with the rules of Islamic finance, the only guarantee Nakheel's bondholders have is Dubai World's -- Dubai World guarantees full payment of the bonds, which with accumulated profit will come out to an estimated $4.05 billion on Dec. 14. Whether Nakheel has assets that could be sold off is only relevant to bondholders insomuch as it might help Nakheel raise the cash needed to repay them. The transfer to Istithmar would presumably help toward that goal.

The big mystery is not how the deal helps Nakheel -- shedding non-core assets like completed hotel companies is a natural part of any restructuring. The big question is how Istithmar paid for the assets. Clearly, the company probably paid Nakheel a fraction of the assets' book value, thereby forcing Nakheel to write off a paper loss. In turn, Istithmar can book the assets at par, immediately improving its return on investment, and perhaps even allowing it to book a paper profit that will help alleviate the red ink already on its books. Since the hotels generate cash, it is conceivable that Istithmar borrowed the money to buy Nakheel's hotels by collateralising the hotels' cash flow. A risky move, but one that, given how limited Dubai World's access must be to funding at this point, may have been one of a limited number of options.