Nakheel says profit payment for $1.03B sukuk on time

Nakheel says profit payment for $1.03B sukuk on time

Co says profit payment of 10 pct on time; Nakheel says the payment due on Dec. 15; The $1.03 bln sukuk was issued in August

December 12, 2011 1:29 by Reuters

Troubled Dubai developer Nakheel said on Monday that the profit payment of 10 percent on its $1.03 billion sukuk issued earlier this year would be made on time.

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.

Nakheel said all arrangements have been made to ensure that Deutsche Bank, the arranger of the sukuk, can make the payments. The payment in due on Dec 15.

The developer, which built man-made islands shaped like palms and a map of the world, said earlier this month that it posted a profit of 526 million dirhams ($143 million) in the six months to June.

Nakheel was absorbed by the Dubai government earlier this year as part of its former parent Dubai World’s restructuring agreement.

It narrowly avoided a 2009 sukuk default after Abu Dhabi stepped in with a last-minute lifeline. Two other Nakheel sukuk, which matured in 2010 and 2011, were paid in full by Dubai.

“Nakheel is pleased to confirm that the profit payment of 10 percent due on 15 December 2011, on the trade creditor sukuk issued in late August this year, will be paid on time,” Nakheel said in the statement.

The sukuk is trading at a deep discount to par reflecting weak investor demand and is indicative of the risks relating to full and timely repayment.

It was bid at a cash price of 73.125 on Monday afternoon, to yield nearly 19 percent, according to Thomson Reuters data. The bond was issued at a price of 100.00 (Reporting by Praveen Menon; Editing by Shaheen Pasha)