The rally that sent real estate company bond yields in Dubai to record lows risks petering out because the emirate’s property recovery may not be broad enough to justify further price gains.
Dubai Holding Commercial Operations’ January 2014 and February 2017 bonds were cut to hold from buy at Exotix Ltd. after yields fell to the lowest since 2007 this month. Emaar Properties PJSC (EMAAR)’s August 2016 note yields rose nine basis points to 4.44 percent yesterday since Oct. 23, when the company reported third-quarter profit that missed estimates. Property company Nakheel PJSC’s 10 percent sukuk, or Islamic bonds, due June 2016 have “little upside potential,” Exotix said.
A nascent real estate recovery in Dubai has been limited to a few areas in the emirate, which suffered a property slump in the past four years causing values to fall by as much as 65 percent. While the pick up is set to continue, opportunities in the bond market are limited at current prices, Exotix, National Bank of Abu Dhabi PJSC (NBAD) and Emirates Investment Bank PJSC (EIBANK) say.
No comments:
Post a Comment