It's "highly unlikely" that Nakheel will manage to pay the principal on the notes, which mature in 2016, from its own capital, Exotix said in an e-mailed note today. The developer, which drove Dubai to the brink of default just over three years ago, may fall 70 percent short of funds required to settle $3 billion of sukuk and bank debt maturing that year, it said.

The yield on Nakheel's Shariah-compliant notes dropped 904 basis points, or 9.04 percentage points, in 2012 as the state- run developer resumed projects it put on hold during Dubai's real estate crash. Investors have purchased the debt "on conviction that it's backed by the Dubai government," Exotix said. Nakheel received a bailout from the government in December 2009 to settle a sukuk.

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