Dubai : Nakheel trade creditors will be offered a large-scale Islamic bond as part of a debt restructuring plan issued by parent firm Dubai World on Thursday, a source close to the company said yesterday.
The Dubai government pleasantly surprised the market last week when it promised to pay off Nakheel's upcoming Islamic bonds and Dubai World, and said trade creditors will receive full repayment of their agreed claims through 40 per cent in cash and 60 per cent in the form of a publicly tradable security.
Statement
Nakheel did not elaborate on the form of tradable security that would be offered, but is expected to make a separate statement regarding the deal soon.
The source told Reuters that a sukuk was planned as it would allow the company to reach a larger universe of future bondholders from both conventional and Islamic financial institutions that must abide by Sharia-compliant investments.
A spokesman for Dubai World declined to comment.
"The sukuk is proposed at this time, but other security structures are being considered as we want to ensure that the instrument is liquid as possible for trade creditors," a spokeswoman for the Dubai government said on Friday.
The size of the Islamic bond, or sukuk, will depend on the total amount owed to creditors but it is too early to estimate given the difficulty the company and creditors are having in valuing Nakheel's assets, he said.
Discussions between Nakheel and its creditors will likely continue into April and possibly May, making it unlikely to see an issuance before June, the source said.
