Nakheel debt may be restructured

Dubai: Dubai World, the government-owned investment group, may be forced to restructure a $3.5 billion bond issued by property unit Nakheel, driving a review of the emirate's companies by Standard & Poor's.

Nakheel's sukuk bond due in December has slumped to 83 cents on the dollar, raising the yield to 52 per cent, on concern the company may be unable to repay its debt after house prices more than halved since August, according to Colliers International.

S&P has been told "that 'all options' in dealing with outstanding liabilities are being considered as part of an ongoing review, including a restructuring", the rating company said.

Dubai and its state-owned companies borrowed $80 billion to fin-ance its transformation into a regional financial and tourist hub. The global credit crisis has left companies struggling to attract investors to refinance the $10 billion of bonds and syndicated loans that S&P said in March were due in the remainder of the year.