Dubai Holding restructuring gets investors' thumbs-up

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DUBAI HOLDING: Bond investors give thumbs-up to proposed restructuring. (Getty Images)

Bonds sold by Dubai state-owned companies hit a near 12-month high Monday on speculation the emirate may achieve a “friendly” early restructuring of corporate debt.

The Dubai government’s announcement on Sunday to reorganise state-owned Dubai Holding LLC and speed up the issuance of the second-half of a $20 billion bonds program is encouraging investors that Dubai will be able to provide cash to companies struggling to refinance maturing debt, news agency Bloomberg reported.

''The market has started to get the comfort that there are potential repayment possibilities, or at least some friendly restructuring possibilities,'' Abdul Kadir Hussain, CEO of Mashreq Capital told the news agency.

Nakheel’s three-year bond due Dec. 14 traded at 92.25 cents to the dollar at 2:01 p.m. in Dubai, according to Citigroup Inc. data provided to Bloomberg.

The bond closed at 92.50 cents on Aug. 14, its highest price since Sept. 15, and up from its one- year low of 63.5 cents in February.

Meanwhile, Dubai Holding’s seven-year 740 million euro bond due in 2014 surged to 80 cents Monday, rebounding from 52 cents in February.

On Sunday, Dubai Holding, the investment group owned by Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum, announced it is to streamline its operations into four different units - property, business parks, hospitality and investments.

In a statement chief executive Ahmad bin Byat said: ''The realities of the global economic climate have made it necessary for us to look at our portfolio in a different way.

''In order to remain competitive in the marketplace, and be sure that we are poised for success once the markets open up, we've undertaken a number of changes that will reinforce and strengthen our business.''

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