Dubai's JAFZA repays $2 billion Islamic bond

Dubai’s JAFZA repays $2 billion Islamic bond

JAFZA looks to repay Islamic bond five months ahead of time.

June 24, 2012 11:33 by Reuters

Dubai state-owned industrial hub Jebel Ali Free Zone (JAFZA) repaid in full a 7.5 billion Dirhams ($2.04 billion) Islamic bond, or sukuk, on June 21, five months ahead of maturity, according to a regulatory filing from the company.

The early redemption of the sukuk certificates was expected after the company, a unit of state conglomerate Dubai World, secured agreement from bondholders to change the terms of the notes last month.

The sukuk was refinanced through a $1.2 billion sharia-compliant loan, along with a new sukuk issue of $650 million and the company’s own cash resources.

The timely repayment of JAFZA’s sukuk was a major investor concern this year, but early redemption has helped lift confidence in the emirate’s credit story, as demonstrated by a strong rally on Dubai sovereign and government-related bonds last week.