Much of the land backing a $1.03 billion sukuk bond from Dubai property developer Nakheel is unreclaimed seabed, bank sources said, leaving trade creditors holding the paper with scant recourse to tangible assets in the event of a default.
The Islamic bond, or sukuk, is part of Nakheel's $16 billion debt restructuring deal which repays trade creditors 40 percent in cash and 60 percent via the bond.
The two assets that back the sukuk are a strip of waterfront land and a still partially submerged crescent that will form part of a man-made island shaped like a palm at Jebel Ali, on Dubai's outskirts.
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