Dubai developer to give trade creditors 40% cash and 60% Islamic bonds
Nakheel is to pay trade creditors with a bond that will yield a 10% return in a rescue deal unveiled by the Dubai government today. The troubled Dubai developer, which owes British construction companies money, will pay trade creditors in 40% cash and 60% Islamic bonds.
Nakheel is to prioritise paying locally-based trade creditors above foreign banks in a bid to revive Dubai’s economy. A source quoted by Reuters said: “If you pay international banks, the money goes to London. If you pay the trade creditors, the money stays in the economy and maybe kick-starts it again."
The deal is part of the government’s efforts to rescue Nakheel’s parent, state-linked entity Dubai World. In November last year Dubai World shocked global markets by announcing it would request a delay on repaying $26bn of its debts. It then narrowly avoided defaulting on a $4.1bn Islamic bond linked to Nakheel, after a last-minute bailout from Abu Dhabi.