

Investors expect to repay sukuk by deadline
Dubai property developer Nakheel is in talks with parent company Dubai World regarding its $3.5bn sukuk issue, which matures on 14 December, according to a company statement issued to the Nasdaq Dubai on 11 November.
The sukuk is listed on the bourse. Nakheel said it could “confirm it is in discussions with its parent regarding the forthcoming December 2009 sukuk maturity.”
The company said it issued the statement in response to a query from the Nasdaq Dubai.
The sukuk was now trading at more than 110 cents on the dollar on 10 November, as investors’ confidence grows that it will be repaid.
“It now seems too late for Nakheel to do anything other than repay this sukuk and judging by the secondary market prices [on the Nakheel sukuk]investors are convinced it will be repaid on time,” says a Dubai-based banker.
The December debt was issued as a pre-initial public offering sukuk. This gives the sukuk investors the opportunity to convert to equity if Nakheel floated on a stock exchange. If this has not occurred, investors are entitled to a premium that brings the repayment level to 106 cents on the dollar.
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