Nakheel bonds rose to their highest price in more than a year this week as speculation increased that the Dubai Government-controlled developer will repay a US$3.52bn (Dh12.93bn) debt due in December.
Investors in Nakheel's $3.52bn Islamic bond could profit handsomely if the company pays off the debt as scheduled, analysts say.
Repayment of the sukuk, which has emerged as one of Dubai's biggest financial challenges, is becoming increasingly likely as time goes on.
A restructuring of the debt has long been rumoured, but with the start this week of Ramadan, typically a slow period for investors and markets, Nakheel is running out of time.
"The window for a friendly organised restructuring is closing rapidly," said Abdul Kadir Hussain, the chief executive of Mashreq Capital. "At that point you're left with one of two options, which are a full repayment or the one none of us want to conceive of, which is potentially a default. And I think it's still highly unlikely that there would be any outright default."
Nakheel, the developer of -Dubai's palm-shaped islands, has been forced to delay projects and cut jobs after property prices in the emirate dropped as business activity slowed and lending stalled because of the financial crisis.
Nakheel's sukuk price started to fall last September, dropping 38 per cent to a low of 63.5 cents in February. As with other bonds, those falls reflected increased worry that Nakheel would default on the debt. It also pushed up the sukuk's yield, or the returns new investors could expect if the bond were to be repaid in full.
In the past month, however, investors appear to have grown much more optimistic about being paid back. The sukuk's price has risen by 46 per cent since its lows in February, while its yield has fallen by 28 per cent in a month, reflecting increased confidence of a repayment that will leave investors whole.
As a consequence, those who invested when prices were low and yields were high in February, March and April could stand to make substantial profits if Nakheel does pay off the bond, whether it raises the money from a syndicate of banks or finances repayment through its parent -company, -Dubai World. The company is set to pay back the bond at 115, or 15 per cent above par, meaning investors who bought when it was close to 60 would earn a return of about 90 per cent.
"The guys who were able to buy the sukuk at its lows in March and April would have pretty much doubled their money," Mr Hussain said. "But even today this thing is trading in the low 90s, so if you buy this in the 92 to 93 price range and get paid 115 in four months, that's a 40 or 50 per cent yield on an annualised basis. That's still very attractive."
The sukuk does come with risks attached, however. As its December maturity approaches, Nakheel has to juggle other obligations, including a payment of nearly $300 million this month on a syndicated Islamic bank loan it took out in 2007. It will have to pay another instalment on that loan next February. Another Dh3.6bn sukuk comes to maturity next May.
How Nakheel and Dubai World handle these debts is widely seen as indicative of how the Dubai Government will address its overall debt load, which has been estimated at $80bn, incorporating the borrowings of state-linked companies.
The emirate may finance these debts partly by tapping a bond programme it launched in February in which it is borrowing $20bn in two tranches. The first $10bn came from the Central Bank, and the second $10bn may come from the Central Bank, international investors, or a combination of the two. Nakheel said in May that it was receiving funds from the programme, but did not reveal how much.
afitch@thenational.ae
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
UAE currency: the story behind the money in your pockets
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Killing of Qassem Suleimani
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
INFO
Everton 0
Arsenal 0
Man of the Match: Djibril Sidibe (Everton)
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
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Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
Set-jetting on the Emerald Isle
Other shows filmed in Ireland include: Vikings (County Wicklow), The Fall (Belfast), Line of Duty (Belfast), Penny Dreadful (Dublin), Ripper Street (Dublin), Krypton (Belfast)
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid