Nakheel revises terms of $750m sukuk

Dubai property developer Nakheel said on Monday it is revising the redemption terms for its $750 million sukuk which matures in 2011, as concerns over how it will repay its debt weigh on the market.

The state-owned developer of palm-shaped islands off the coast of Dubai also has $3.5 billion worth of Islamic bonds which mature in December, and questions remain over the government's plan for them.

"The document relates to a slight differential in the redemption price formula offered to the initial sukuk holders and the formula finally used in the offering circular," Nakheel said in a statement, referring to a notice issued to investors earlier by Deutsche Bank, the principal paying agent, seen by Reuters.

Nakheel did not say why it is revising the redemption terms, when contacted by Reuters.

"The difference is minimal and favourable to sukuk holders. Consent of sukuk holders is not required for the amendment, however the Transaction Administrator wished that sukuk holders be notified ahead of formal approval," it said.

The next payment for the bond is due on July 16 and the final payment on January 16, 2011, according to the bank's notice.

"There was a discrepancy in the calculation of accreted coupons between the term sheet and the prospectus, and the proposed amendment was intended to correct it," said Ziad Shaaban, director, asset management, at EFG-Hermes in Dubai.

The developer said in May it was receiving funds from the Dubai government as it looked to complete projects and pay outstanding obligations.

The firm, hit hard by the global financial crisis, cut 400 more jobs in addition to 500 last year, newspaper The National reported last week, as the emirate's once-booming property sector suffers a sharp slowdown. (Reuters)