Author : editorial
The $3.52 billion (Dh12.92bn) Nakheel sukuk (09) traded yesterday above its maturity value on high demand from investors, sources in the bond market said.
Expectation of an additional $6 bonus to be redeemed against each note on the maturity date of December 14 coupled with the positive sentiment generated by the reassuring speech made by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and the Ruler of Dubai, saw the Nakheel sukuk (09) trading at around $111.5, which is above the maturity value of $109.57, said market sources.
Top officials representing institutional investors and bond traders told Emirates Business that in the absence of a qualified public offer (QPO) - whereby sukuk holders could exercise the option of subscribing to the public share offer - the issuer would pay the holders an additional $6 per note.
"Nakheel, or the managers of the sukuk issue, have not made any official statements with regards to the public offer as yet. But given the fact that it is just over a month left for the maturity of the Nakheel sukuk, most investors have ruled out a public offer tied to this coming up," an official with the fixed income desk of a leading investment banker said.
With an annual coupon of 3.19 per cent, the maturity value of the three-year Nakheel sukuk works out to $109.57.
So it is obvious that the trading price of $111.5, thus results in a negative yield of about eight per cent, according to people involved in the trading.
As lower price represents higher yield in the case of a sukuk or bond, Nakheel sukuk has so far been viewed as attracting less demand from investors due to uncertainty over repayment method.
"But now the scenario is changing and investors have become extremely positive about the prospects of the repayment," investors said.
Following the $1.2 billion repayment concluded by Nakheelabout three weeks ago, renewed activity picked up at the Nakheel(09) counter.
During the third week of October, the sukuk had traded at around $106.5 which worked out a yield of 27 per cent.
Sources said the recently launched Dubai DOF bond issued under the $2.5 billion Trust Certificate Issuance Programme is also trading above its issue price yielding less than its coupon.
Source : Zawya
Source : Zawya
