Dubai developer makes first attempt to tap capital markets since major debt restructuring
Dubai's Nakheel has approached banks for a $200m financing in its first attempt to tap capital markets in over two years, and about a month after it completed a complex restructuring of its massive debt pile.
"Nakheel is approaching banks and discussions with them are progressing well," a Nakheel spokesman said on Sunday.
The indebted developer is now wholly-owned by the Dubai government as part of its former parent Dubai World's debt restructuring.
The developer, which overstretched itself building islands in the shape of palms and other ambitious projects, will use the funds for new projects that include the expansion of the Dragon Mart mall, one of its retail assets.
This is the first time that the developer would seek to raise fresh financing since 2009, when a property market collapse forced Nakheel to restructure its $16bn debt.
Dubai has already given as much as $8.71bn to the developer. The company announced in August that it completed the restructuring and would soon deliver pending projects and pay investors.
Dubai's property boom ended in 2008, with home prices plunging by about 60 percent forcing many developers to abandon projects.
Some of Nakheel's ambitious projects like Palm Jebel Ali, another palm-shaped island stretching into the sea, is yet to be complete.
Nakheel's chairman Ali Rashid Lootah said its full year profit should be in-line with its 2010 results, bolstered by its leasing and retail businesses.
The indebted developer issued $1.03bn under the first tranche of the $1.31bn sukuk earlier this year to trade creditors.
Yep, that's a safe bet.
Having just read an AB article which relates to the fact that Dubai can meet its 2012 $14 billion debt repayment due, with ease but then adding some caveats, I am surprised that now is seen as an opportune moment for Nakheel to go to the markets to raise capital.
Especially with the spectre of their own overall liabilities that in the past few months seems to have risen from the often previously quoted US$ 10.7 billion to $16.1 billion. European Banks and former lenders to the firm are in a spot of bother right now facing regulation for additional capitalisation, bailouts etc. US has its own woes, that means looking eastward one suspects.
Anyway I quote from the debt article and a comment presumably made by JP Morgan, "Meanwhile, the government's property arm Nakheel , which recently completed its $16bn restructuring, is expected to see an injection of $1.5b to $2bn over the June 2011 to December 2012 period [from the government]". So is this attempt to go to the markets a tester?