Nakheel Bonds Show Confidence in Dubai Debt Restructuring: Islamic Finance - Bloomberg

The Islamic bond market is showing that Dubai is regaining investor confidence after a group of creditors agreed to restructure Nakheel PJSC’s debt.

The average yield on sukuk sold by Gulf Cooperation Council borrowers fell eight basis points yesterday to 7.23 percent, according to the HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index. It reached 8.76 percent on Dec. 11 after Dubai investment companies announced plans to restructure debt in November. The yield on Nakheel’s 2.75 percent $750 million fixed-rate Islamic notes due in January 2011 has fallen 17 basis points this month to 15.30 percent, according to prices compiled by Bloomberg.

Creditor banks “unanimously supported” a proposal on altering the terms on $10.5 billion of loans and unpaid bills, Nakheel, the Dubai World-owned property developer, said yesterday. The yield difference on GCC sukuk and the London interbank offered rate narrowed six basis points yesterday to 535 basis points from as wide as 647 at the end of November.