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Mon 30 Nov 2009 06:51 PM

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Dubai royal invests in bonds, sees positive outcome

EXCLUSIVE: Sheikh Maktoum Hasher Maktoum Al Maktoum shows 'significant' support for emirate.

Dubai royal invests in bonds, sees positive outcome
BOND INVESTMENT: Maktoum Hasher Maktoum Al Maktoum said on Monday he had made a significant investment in Dubai bonds. (ITP Images)

A member of Dubai’s ruling family said on Monday he had made “significant investment” in the emirate's bonds following a government decision to renegotiate the debts of its flagship company.

Sheikh Maktoum Hasher Maktoum Al Maktoum, CEO of the UAE-based conglomerate Al Fajer Group and nephew of Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum, told Arabian Business that he made the investment across three of the Dubai’s bonds on the first day of trading following the Eid break.

“You don’t bottom out on positive news,” said Sheikh Maktoum. “I’m looking to invest in these bonds now because this is the last high yielding bond.”

Nakheel’s Islamic bond, which was originally due to mature on Dec 14, was trading as high as 110 on Wednesday, according to Reuters data. The following day it fell by 30 points to a record low of 40 points.

“It looks like a final consolidation of the Dubai position,” said Sheikh Maktoum. “Things are being taken in as a whole and managed as a whole and solved as a whole so am quite happy about it because you always bottom out on very negative news.

“Some of the bonds are trading at minus 50 percent,” he added. “If you buy the bond and if it is paid on the 14th December, you stand to make 100 percent. If they pay you in six months you are still stand to make 100 percent return on investment. Even if they renegotiate and do a haircut reduction you stand to make up to 50 percent.”

Last week Dubai said it would ask creditors of state-backed Dubai World and Nakheel to agree to delayed debt repayments, as part of a wider restructuring plan. Dubai World has $59bn of liabilities, representing a large part of Dubai’s total debt of $80bn.

Dubai World subsidiary DP World will not be part of the restructuring process.

Global markets tumbled following the news. On Monday Dubai’s bourse ended 7.3 percent lower, its sharpest one-day decline since October 8.

Sheikh Maktoum said he didn’t expect the global reaction the debt delay call had caused but said the extension was plausible.

“For me it’s a very plausible scenario because I think what the experts or the people who are handling the situation are trying to do currently they are trying to handle the solution as a turnkey solution, they don’t want to do a short term fix and then be in trouble in another six months.

“Restructuring debt in a downturn is a normal scenario,” he added. “Many companies and governments have renegotiated debt and I view this as a positive outcome. I believe in Dubai and the UAE in the long term, no matter what.”

Arabian Business: why we're going behind a paywall

sunil 10 years ago

My friend who is a well respected trader in Indian circles has gone against the tide[placed a big order for these bonds today] has never lost a penny in his career.

Kenneth John 10 years ago

I would like to congratulate an astute business man as well as a true patriotic guy just before National Day who is standing by Dubai at this time of gross devalued speculation about this fine emirate. People do forget the state of the economies in other countries and the media has been totally over the top on putting Dubai down. Debt renegotiations happen all the time and I will also be sticking by Dubai in her time of need.

Indian 10 years ago

I would have done the same if I had the money. Not too much coz of business reasons but for emotional reasons as Dubai has given me everything I have today and this is the time to stand by it against all the negative news being written against Dubai. Where do some reporters get their news from? It is a shame to write off such a successful Emirate who has dared to dream and acted towards reaching the dream? How many of us dare to do this? So think before you write such killing negative news about Dubai.

GMX 10 years ago

This is the hour of need. All the bad press by the Western media should be withdraw. The west is all out to name and shame Dubai. What Dubai has acheived in the past 6-8 years cannot be achived in any part of the World. Dubai has done Miracles Like many who consider Dubai thier home , the Emirate has given a lot to each and everyone both the Rich and the common man on the street. What is happeing these days by the newsmongers is nothing but Jelousy by the WEST. Dubai we shall over come.

Altamash Javed 10 years ago

Always do the opposite to what the market is doing and many a times you will make great money. That is something the world's greatest investor Warren Buffet has done time and again. I remember the time he bought Goldman, everyone called him mad (the analysts). The Sheikh has bought the bonds at a huge discount due to the panic, and I am pretty sure it will pay back big time. Very few can keep a cool mind and smile when the whole world cries.

Patience 10 years ago

Well done. I would definitely have done the same if I was a national and had the money. And I also say that the Dubai rulers have done A LOT for its nationals. It is time to pay back just a little. If all nationals get together and contribute, this small debt can be wiped out in a very short time. Then it can be truly said that all are together in GOOD as well as bad times.