DIB Leads Bank Rally on Debt Restructuring Progress: Dubai Mover

Dubai Islamic Bank PJSC gained the most in more than a week as progress on corporate debt restructuring boosts the outlook of lenders in the emirate.

Dubai Islamic added 2.4 percent, the biggest advance since May 5, to 2.94 dirhams. The stock was the most-heavily traded on the benchmark DFM General Index, while Commercial Bank of Dubai PSC, the biggest gainer in percentage terms, jumped 14 percent to the highest since November 2008. Share-trading volume of the bank, known as CBD, was five times the three-month daily average as 12 trades were executed, data compiled by Bloomberg show.

Lenders in the United Arab Emirates are advancing after Dubai Group LLC, an investment company owned by Dubai’s ruler, agreed this month on final terms to restructure $6 billion of debt with its main creditors. Shares of Emirates NBD PJSC, one of the biggest lenders to Dubai Group, have almost doubled in value this year to 5.35 dirhams today. The Dubai index, the world’s second-best performer this quarter among 94 indexes tracked by Bloomberg, climbed 0.5 percent.

“Investors are playing catch up with Abu Dhabi banks and seem to believe that banks in the U.A.E. shouldn’t be trading below book value after the improving macro picture and the debt restructuring,” said Fadi Al Said, senior fund manager at ING Investment Management in Dubai.

New Terms

Shares of Dubai Islamic, the biggest Shariah-compliant lender in the U.A.E., trade at a price-to-book value of 0.85 times, compared with 1.4 times for Abu Dhabi’s ADX Banks Index and the Bloomberg GCC 200 Financial Index, data compiled by Bloomberg show. Emirates NBD’s price-to-book value is 0.83 times. CBD, which hired banks last week for a possible bond sale, trades at a multiple of 1.3.

Dubai Group said on May 9 that after the completion of the restructuring, claims of bank creditors will rank above those of related parties, who are owed an additional $4 billion. Islamic mortgage provider Amlak Finance PJSC is also proposing to extend the maturity on more than $2 billion of loans to creditors, two people familiar with the plan said.

Dubai’s economy, which is recovering from one of the world’s worst property crashes triggered by the 2008 global credit crisis, is set to expand 4.6 percent, on average, between 2012 and 2015, more than twice as fast as in the prior four years, government forecasts show.

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