London: Dubai debt insurance costs rose back above 400 basis points yesterday while the 2015 bond issued by the Dubai Department of Finance fell half a point, but Nakheel saw its bonds extend gains.
Five-year credit default swaps (CDS) for Dubai were quoted at 405 basis points yesterday by CDS tracker CMA DataVision, up three basis points versus Thursday's close.
This is a jump of 45 basis points from earlier on Thursday when CDS fell to their lowest since Nov 24, 2009 — a day before Dubai World requested debt restructuring.
Caution
The 2014 Islamic bond issued by the Dubai department of Finance fell 0.450 points in price with the yield up 11.6 basis points.
Some analysts, however, remained cautious.
"The finances of the government of Dubai itself remain stretched and, in fact, appear to be put under greater near-term strain by the terms of the proposed restructuring agreement," HSBC said in a research note.
But bonds on Dubai World subsidiary Nakheel continued to rise.
The dirham-denominated Islamic bond due May 2010 was quoted with a bid/offer of 94/97 after trading at 94.75 on Thursday, the highest since July 2008.
Outlook
The January 2011 dollar issue rose half a point.
The Dubai government on Thursday announced a $9.5 billion debt restructuring proposal repaying in full the 2010 and 2011 bonds of developer Nakheel when they come due, if creditors agree its broader proposal to restructure $26 billion in debt linked to Dubai World.
Dubai's finance chief said yesterday that the emirate said the bond repayment would avoid "potential complexities", and there was no preferential treatment for bondholders over other creditors.
