Nakheel repays Dh3.6b sukuk

Dubai: Nakheel's on-time payment yesterday of its Dh3.6 billion ($980 million) sukuk (Islamic bond) is seen as a positive step within the overall restructuring programme of Dubai's largest developer.

Nakheel announced on Nasdaq Dubai that the Dubai Financial Support Fund (DFSF) had made available sufficient funds to allow for the repayment in full of the sukuk issued by Nakheel Development 3 Limited, which matured yesterday.

The exchange had earlier suspended Nakheel securities from trading because it had failed to comply with filing the annual report and financial statements by April 30.

"We remain subject to listing rules and regulations," a Nakheel spokesperson told Gulf News adding that: "The effecting of payment to the individual sukuk holders is carried out by the distributing agent."

Deutsche Bank is the distribution agent for Nakheel's sukuk. The repayment was widely anticipated, since an official announcement back in March assured that all the developer's sukuks would be repaid on time.

Craig Plumb, the head of research for Middle East and North Africa at Jones Lang LaSalle, said the sukuk payment on time was a good move. "We have had some surprises before. The payment of the sukuk alone is not groundbreaking news but only recently DMCC also repaid a sukuk and together these events form a trend which is good for the market."

The value of Nakheel's sukuk notes has doubled since March, according to a Bloomberg report. However, experts don't expect an immediate reaction on the market to yesterday's repayment.

Priced in

"The sukuk will likely get paid in full but the market already priced that in, so I don't expect much reaction in terms of market movements," said Saud Masud, head of research and senior analyst for real estate at UBS in Dubai.

Nakheel received a cash injection of $8 billion (around Dh30 million) via the DFSF back in March to assist payment to its creditors and the continuation of its projects under construction.

Nakheel and its parent company, Dubai World, are also still renegotiating the terms of its restructuring plan. A special committee has been set up in this regard to deal with all issues pertaining to creditors and its subsidiaries at the Dubai International Financial Centre's (DIFC) Courts.

An offer to repay in full but roll the credit over to two new securities maturing in five and eight years has been made at the end of March, but although HSBC, for example, said it was amenable to accept it, a clear picture of full acceptance by the consortium of creditors, involving eight major banks, has not yet emerged.

"Anecdotal evidence one hears in the market is that at least half of the banks are happy to accept," Plumb said.

Accord on DH6b claims

Nakheel has secured agreement on over 50 per cent of total agreed claims by its trade creditors, with claims of approximately Dh6 billion, the company said in a statement yesterday.

Within a month of presenting its trade creditors with a settlement agreement offering them 100 per cent recovery of agreed claims, Nakheel has secured the agreement of many of its trade creditors, "We are very close to reaching the needed agreement for a 40 per cent cash payment to our trade creditors, and yet another step closer to resuming work on our near-term projects and delivering on our commitments to our customers," a Nakheel spokesperson said in the statement.

Under the plan announced by Nakheel last month, trade creditors are offered 100 per cent recovery of their agreed claims with a 40 per cent cash payment and 60 per cent in the form of a publicly tradable security, with a 10 per cent annual return.

— N.W.