Nakheel Yields Double 2007 Show Closed Market: Islamic Finance - BusinessWeek

Dubai World-owned Nakheel PJSC’s Islamic bonds are trading at yields twice as high as in 2007 even after a four-month rally, underscoring the difficulty for Persian Gulf real-estate companies to borrow through debt sales.

“Access to the market is still difficult for companies operating in the real-estate sector,” Mohamed Damak, Paris- based credit analyst and co-chair of the Islamic finance working group at Standard & Poor’s, said in an interview yesterday. “The market is somewhat closed for these entities.”

The yield on Nakheel’s 2.75 percent sukuk fell to 15.4 percent yesterday from 86 percent on March 25, when Dubai’s government said it would support the company with $9.5 billion, according to prices compiled by Bloomberg. Nakheel, a builder of palm-shaped islands off Dubai’s coast, is a unit of Dubai World, the world’s third-largest port operator.