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Fri 26 Mar 2010 03:49 PM

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Nakheel repayment to avoid 'complexities'- official

Dubai offered to repay in full two sukuks issued by property unit Nakheel.

Nakheel repayment to avoid 'complexities'- official
DUBAI DEBTS: The conglomerates bank creditors were offered new debt covering the $14.2 billion they are owed but repaid in five to eight years.(Getty Images)

Dubai offered to repay in full two Islamic bonds issued by property unit Nakheel to avoid "potential complexities," Dubai's finance chief was quoted as saying on Friday.

Abdulrahman al Saleh, director general of the Dubai finance department, said the debt plan did not give preference to holders of the Islamic bond, or sukuk, over the rest of state-owned conglomerate Dubai World's creditors.

"If we suppose that all (creditors) are going to get their rights, we cannot talk about preferring any of the parties," Arabic language daily Al Khaleej quoted Saleh as saying in remarks to be aired in a television interview later on Friday.

"But the nature of sukuks, as securities, has potential complexities, for which we saw that it is better to pay them when due."

In a surprise move, Dubai said on Thursday it will pay off the Nakheel 2010 and 2011 bonds, or sukuk, when they come due, if creditors agree its broader proposal to restructure $26 billion in debt linked to Dubai World.

The conglomerate's bank creditors were offered new debt covering the $14.2 billion they are owed but repaid in five to eight years.

"For the Nakheel sukukholders, it sounds great," said a banker at a Gulf-based creditor bank. "For everyone else, we'll have to see who gets paid what and when." (Reuters)

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