Islamic bonds of Tamweel PJSC, the United Arab Emirates’ biggest mortgage company, show investors are skeptical that Dubai World’s debt restructuring will resolve the emirate’s financial woes.
Tamweel’s 4.31 percent sukuk due in 2013 are the worst- performing Islamic bonds in the U.A.E. in the past five months after their yield surged 867 basis points, or 8.67 percentage points, since an April 13 low. Yields on the debt climbed six basis points to 19.64 percent since Sept. 9, the day before Dubai World unveiled an accord with 99 percent of creditors. Yields on notes from Dubai World’s DP World Ltd. fell 22 basis points in that time.
While the state-owned holding company reached an agreement with creditors to alter the terms on $24.9 billion of debt, government-controlled businesses are still struggling to meet obligations. A government plan to merge Tamweel, which has a $235 million loan due in January, with Amlak Finance PJSC has been in the works for 22 months. Both shares have been suspended since 2008.
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