Nakheel, which is building palm tree-shaped islands off the emirate’s coast, posted a first-half loss of 13.4 billion dirhams ($3.65 billion) as revenue fell and it wrote down the value of land and property.
Nakheel’s repayment of the $3.52 billion bond was the biggest debt obligation for a Dubai entity since global credit markets froze after the September 2008 collapse of Lehman Brothers Holdings Inc. Nakheel accumulated debt during a six- year real-estate boom in Dubai, when the sheikhdom borrowed $10 billion and its state-controlled companies $70 billion to help diversify the economy.
Nakheel’s 2009 sukuk redeems at 115.52 cents, increasing the total payment to $4.1 billion. The amount includes a 6 percent premium to bondholders because the company didn’t do an initial public offering during the life of the bond, and the remaining part of the annual coupon.
Nakheel Bond Speculation
Nakheel’s bond had surged 18 percent in the last two trading days to 53 cents on the dollar, according to Citigroup Inc. prices, on speculation the developer will seek to avoid a default. They traded as low as 45 cents on Dec. 9.
Dubai’s government will also announce a “comprehensive reorganization law, a framework that is based upon internationally accepted standards for transparency and creditor protection,” according to the statement. “This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations.”
Islamic bonds, known as sukuk, are governed by Shariah laws barring investors from profiting from the exchange of money.
To contact the reporter on this story: in Dubai on
Nakheel’s repayment of the $3.52 billion bond was the biggest debt obligation for a Dubai entity since global credit markets froze after the September 2008 collapse of Lehman Brothers Holdings Inc. Nakheel accumulated debt during a six- year real-estate boom in Dubai, when the sheikhdom borrowed $10 billion and its state-controlled companies $70 billion to help diversify the economy.
Nakheel’s 2009 sukuk redeems at 115.52 cents, increasing the total payment to $4.1 billion. The amount includes a 6 percent premium to bondholders because the company didn’t do an initial public offering during the life of the bond, and the remaining part of the annual coupon.
Nakheel Bond Speculation
Nakheel’s bond had surged 18 percent in the last two trading days to 53 cents on the dollar, according to Citigroup Inc. prices, on speculation the developer will seek to avoid a default. They traded as low as 45 cents on Dec. 9.
Dubai’s government will also announce a “comprehensive reorganization law, a framework that is based upon internationally accepted standards for transparency and creditor protection,” according to the statement. “This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations.”
Islamic bonds, known as sukuk, are governed by Shariah laws barring investors from profiting from the exchange of money.
To contact the reporter on this story: in Dubai on
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