Nakheel pledges 25 August for Sukuk issue

Developer sets date as rumours swirl of banking interest in bond sale

Nakheel's Sukuk suffered delays due to 'administrative reasons'.
Nakheel's Sukuk suffered delays due to 'administrative reasons'.

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Nakheel Properties, developer of Palm Jumeirah, said it would issue its AED 4.8m Sukuk to investors on 25 August, two months after the original release date.

The Dubai World developer has sought to restructure around $10.9bn in debts amassed during the construction boom in Dubai for much of the last decade, a growth that was partly fuelled by speculators as the economy and population grew.

The company embarked on numerous mega projects on the back of international credit, including three palm-shaped islands of the emirate’s coast, Jumeirah Village and Discovery Gardens, but the financial crisis led to a drought of liquidity and many plans have been scaled back. It was negotiating payments for much of 2010, eventually delivering payment to Arabtec and other construction firms and reaching a 98% agreement with creditors.

Last month the company was transferred to the custody of the Dubai government as part of a wider restructure and managerial change at Dubai World.

At the start of August, the company’s chairman claimed he would have no objection to various banking investors buying the bonds from creditors, following reports of such a move by former Deutsche Bank executives working at SC Lawry Financial in Hong Kong.

“Trade and financial creditors of Nakheel are free to deal with their dues the way they want whether by transferring or selling them to others…Nakheel does not interfere in such negotiations because it is a matter between the creditors and investment banks which seek to buy debt,” Ali Rashid Lootah told Alittihad daily, adding that the appeal of the bonds demonstrated the confidence that Nakheel would honour its debt repayments.

The Sukuk, delayed due to 'administrative reasons', is expected to have a profit rate of 10%.

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