Jafz, DIFC 'may need state help to pay debt'

Dubai: Jebel Ali Free Zone (JAFZ) and DIFC Investments LLC may need government help to meet a combined $3.25 billion (Dh11.95 billion) in debt obligations due this year, Exotix Ltd. said.

DIFC Investments may require as much as $983 million from the government to repay its $1.25 billion bond maturing in June, the investment bank said in an e-mailed report yesterday. "We believe that this government support will be forthcoming and that DIFC has options to alleviate this large funding gap."

Jebel Ali Free Zone may have a $400 million funding gap after a "successful bank debt refinancing", which would need to "be plugged by either the government or with parent Economic Zones World's potential sale of Gazeley Ltd.," according to the report. "We also do not rule out a soft restructuring scenario for Jebel Ali Free Zone."

Exotix initiated Jebel Ali Free Zone's bonds with a "hold" recommendation. The price on the floating-rate Islamic bonds' jumped on Wednesday to the highest since September 2008, according to data compiled by Bloomberg. The notes due in November rose to 95.01 cents on the dollar on February 1.

Jebel Ali Free Zone, which must repay Dh7.5 billion when its Islamic bond comes due in November, has commenced work on "liability management" and is exploring various refinancing options, the company said last year. DIFC Investments had planned to raise $1 billion from asset sales by the end of last year to help pay debt.