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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