The cost of insuring five-year Dubai debt against default jumped to its highest level since March on Monday as concerns intensified over the debt restructuring of state-owned conglomerate Dubai World.

Nervousness over the fate of Dubai World debt grew after Dow Jones reported it is mulling a two-part deal, including one that may repay lenders 60 percent over seven years. Dubai denied the report on Sunday.

Investors, already spooked by a lack of information on the company's plans to repay the debt, reacted with dismay to the reported proposal.

The five-year CDS rose as high as 651 basis points, above the high reached after the Dubai government announced a standstill on debt held by Dubai World in November.

Dubai World is in talks with banks on the debt delay -- about $22 billion linked to its main propery units Nakheel and Limitless World -- but has yet to present a formal proposal.

It staved off default on a $4.1 billion Islamic bond linked to Nakheel, after a last minute bailout from Abu Dhabi in December.   

The price of Nakheel's Islamic bond maturing in January 2011 fell 3.5 points to 50, according to Reuters data. - Reuters