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Nakheel Bases $1 Billion Sukuk on Seabed in Gulf, People Say

Sept. 21 (Bloomberg) -- Nakheel PJSC, the Dubai government-owned developer that issued Islamic bonds last month, based 3.8 billion dirhams ($1 billion) of sukuk on a seabed off the emirate’s coast, two people familiar with the transaction said.

The underlying assets are plot 502 in the Persian Gulf and plot 513 in the desert, the people said, declining to be identified because the information is confidential. Property, which typically back sukuk, is leased out and payments to investors are usually in the form of rental income or profit.

Two calls and an e-mail to Nakheel’s communications department weren’t answered.

The builder of man-made islands of Dubai’s coast issued the debt to contractors and suppliers as the last step of its $16.1 billion debt restructuring. The company plans to issue an additional 1 billion dirhams of the bonds.

The sukuk pay a profit rate of 10 percent and are being used to pay 60 percent of what’s owed to the trade creditors. The remaining 40 percent is being settled in cash. The securities yielded 19 percent today, according to Standard Chartered Plc prices on Bloomberg.

Reuters reported earlier today the sukuk is based on a seabed off Dubai’s coast.

To contact the reporter on this story: Dana El Baltaji in Dubai at delbaltaji@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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