Investors are betting Dubai World will pay off $980 million (Dh5.5 billion) sukuk issued by its property arm Nakheel to avoid a default as it negotiates a debt restructuring proposal with creditors worth about $24 billion. The sukuk, or Islamic bond matures May 13.
According to Zawya.com’s Sukuk Monitor, Nakheel’s sukuk is up 4.5 per cent since the beginning of April and closed at Dh98 on Monday in which it is up almost 85 per cent since the start of March.
People are expecting repayment, however Dubai World, owned by Dubai’s government, declined to comment on the prospects of the sukuk being paid off.
Last month, Dubai World offered a debt restructuring proposal to creditors. The sukuk due in May comes after another $3.52 billion bond issued by Nakheel was paid off last December. In the weeks before that bond matured, hedge funds bought up the debt, hoping to go after the international assets of Dubai World, which had guaranteed the bond.