Nakheel's sukuk yields spiked yesterday, as the developer discusses its options on how to refinance its upcoming debt repayments.
Yields for the developer of Dubai's man-made islands on its Islamic bonds maturing in 2016 hit their highest level since November last year. They had spiked 272.3 basis points to 10.2 per cent since May 22, when the US central bank chairman Ben Bernanke first discussed the possibility of rolling back the country's quantitative easing policy.
Bond yields move in the opposite direction from prices. Nakheel disclosed in February that it was in talks to extend a Dh8 billion loan which falls due in 2015, but reports published yesterday suggested it was talking to banks about a potential bond sale.
When contacted by The National yesterday a Nakheel spokeswoman confirmed only that the company was still in talks with banks to extend the loans
Analysts said investors were responding to a lack of information over progress with the company's refinancing discussions with lenders.
"There was a bit of a panic sell falling across the Dubai Inc spectrum, not just Nakheel," said Ahmad Alanani, the senior executive at Exotix, a boutique investor in illiquid debt.
"With that in mind, there are a lot of fundamental weaknesses in Nakheel as a credit in its own right … we don't know how much progress the company has made in trying to refinance its debt."
However, Nakheel was likely to find easier borrowing conditions in the syndicated loan markets and had a number of assets such as Dragon Mart and Ibn Battuta Mall that could be secured as collateral, Mr Alanani added.
"The picture in the syndicated loan market is actually a bit better than in capital markets," he said. "It's not prone to day-to-day volatility since seen in the bond market."
The company, which was part of the Dubai World conglomerate that spooked financial markets in 2009 when it asked creditors for a debt repayment standstill, has another US$3bn worth of bank debt and sukuk due to mature in 2016.
In January, Exotix cut Nakheel's sukuk bonds to "sell", saying that it thought it was "highly unlikely" that Nakheel would be able to pay the principal on the notes from its own capital when they fell due.
Abu Dhabi's government bond yields have risen sharply since Mr Bernanke first discussed tapering bond purchases, with the emirate's 10-year bonds maturing in 2019 rising 79 basis points to 2.57 per cent.
"Because US treasuries are the ultimate benchmark, the pricing of everything else is going to move as well," said Giyas Gokkent, the chief economist at National Bank of Abu Dhabi. "Yields have gone up but they've come down from higher levels."
The recent sell-off may have hurt bond investors, but borrowing costs have returned to about the same levels as recently as nine months ago, meaning most issuers would have few difficulties selling new debt if they needed, he added.
Funds tracking the HSBC/Nasdaq Dubai UAE US dollar sukuk index have lost money this year, with total returns down 2.7 per cent year to date.
ghunter@thenational.ae
The Facility’s Versatility
Between the start of the 2020 IPL on September 20, and the end of the Pakistan Super League this coming Thursday, the Zayed Cricket Stadium has had an unprecedented amount of traffic.
Never before has a ground in this country – or perhaps anywhere in the world – had such a volume of major-match cricket.
And yet scoring has remained high, and Abu Dhabi has seen some classic encounters in every format of the game.
October 18, IPL, Kolkata Knight Riders tied with Sunrisers Hyderabad
The two playoff-chasing sides put on 163 apiece, before Kolkata went on to win the Super Over
January 8, ODI, UAE beat Ireland by six wickets
A century by CP Rizwan underpinned one of UAE’s greatest ever wins, as they chased 270 to win with an over to spare
February 6, T10, Northern Warriors beat Delhi Bulls by eight wickets
The final of the T10 was chiefly memorable for a ferocious over of fast bowling from Fidel Edwards to Nicholas Pooran
March 14, Test, Afghanistan beat Zimbabwe by six wickets
Eleven wickets for Rashid Khan, 1,305 runs scored in five days, and a last session finish
June 17, PSL, Islamabad United beat Peshawar Zalmi by 15 runs
Usman Khawaja scored a hundred as Islamabad posted the highest score ever by a Pakistan team in T20 cricket
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Afghanistan fixtures
- v Australia, today
- v Sri Lanka, Tuesday
- v New Zealand, Saturday,
- v South Africa, June 15
- v England, June 18
- v India, June 22
- v Bangladesh, June 24
- v Pakistan, June 29
- v West Indies, July 4
Aston martin DBX specs
Engine: 4.0-litre twin-turbo V8
Transmission: nine-speed automatic
Power: 542bhp
Torque: 700Nm
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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: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
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AT4 Ultimate, as tested
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