Nomura Sees Value in Dubai Bonds, Recovery in Economy

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Dubai government bonds and credit default swaps offer “value” after a proposal by Dubai World to restructure $24.8 billion of debt and renewed appetite for quasi-sovereign securities, according to Nomura Holdings Inc.

“Market pricing of Dubai’s sovereign risk does not reflect current fundamentals, and we therefore recommend exposure either through CDS or government bonds,” Ann Wyman, head of emerging market research Europe at Nomura, wrote in an e-mailed report dated April 16 and received today. “We continue to see value.”

Dubai World, one of the emirate’s three main state-owned holding companies, and its property unit, Nakheel PJSC, are seeking to renegotiate their debt after the global credit crisis battered Dubai’s real estate market and left companies unable to raise new funds. Dubai World asked its almost 100 creditors on March 25 to roll over debt into two new loans of five-year and eight-year maturities.