Nakheel completes securitised bond payback

18 October 2009

Dubai real estate developer Nakheel has completed the repayment of an AED4.4bn ($1.2bn) securitised bond issued in January.

The repayment was made on 15 October, one month ahead of the scheduled repayment deadline of 15 November.

In May, Nakheel negotiated with the banks that bought the securitisation to push back the repayment date from July to November. The slowdown in Dubai’s real estate market was blamed for Nakheel’s request for a deadline extension for the repayment.

The news will come as a comfort to many investors in Nakheel, particularly those worried about the repayment of the company’s $3.5bn sukuk which matures in December. When the bond repayment date was originally extended there was concern that it would clash with the sukuk repayment (MEED 15:05:09).

Under the terms of the securitised bond, Nakheel used future revenue from property sales as security for the debt. The arrangement saw income from the sale of specific properties ring-fenced for the repayment of the loan.

The deal was priced at 325 basis points over the London interbank offered rate (Libor) and was financed by Emirates NBD, Mashreqbank and Noor Islamic Bank, all local, and Saudi Arabia’s Samba, which had taken on 30 per cent of the debt.

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