Banks are gearing up to handle about Dh5 billion of Islamic bonds to be issued to contractors and other trade creditors by Nakheel as part of its restructuring.
The Islamic bonds, or sukuk, are a prime component of the property giant's reorganisation, made necessary by the global financial crisis and the downturn in the local property market. After months of piling up unpaid bills, Nakheel last year began paying cash to contractors owed Dh500,000 (US$136,130) or less. Those owed more were to get 40 per cent in cash and 60 per cent in the form of sukuk shares returning 8 per cent profit per year.
With Nakheel expected to issue the sukuk in the weeks ahead, banks are beginning to advertise custody services to contractors set to receive them. Once the sukuk is issued, contractors must nominate a custodian for their shares, typically a division of a large bank.
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