* Sukuk offered at 80 cents to the dollar in secondary mkt
* Offers in secondary mkts currently have low lot size
* Arabtec CFO says no plans to sell sukuk now
* Nakheel plans to issue $1.6 bln sukuk by H1 end
By Praveen Menon and Dinesh Nair
DUBAI, June 9 Some trade creditors of Nakheel
[NAKHD.UL] are offering a potential $1.6 billion Islamic bond by
the developer at a discount in the secondary market as a
desperate need for cash outweighs hopes for a full repayment.
Nakheel, which is restructuring $10.9 billion in debt, plans
to repay 60 percent of its outstanding debt to trade creditors
through the sale of a 6 billion dirhams ($1.63 billion) Islamic
bond, expected by the end of the first half. [ID:nLDE68R036]
But some of the developer's trade creditors have already
offered the bond in the secondary market at around 80 cents to
the dollar as they seek to cash out rather than wait five years
"The bonds are currently being offered at 80 cents to the
dollar and the bids are at high 70s," said Ahmad Alanani, head
of Middle East North Africa fixed income sales at Exotix in
"Offers are contingent on the sale of the bond, but so far
we have little details on the commercial terms of the sukuk."
Alanani, whose firm is working on a transaction with one of
the trade creditors, said the size of the offering is 50 million
dirhams ($13.6 million). Other trade creditors are also offering
to sell in the market but lot sizes are small, he added.
NEED FOR CASH
Nakheel, which said on Wednesday its chief executive was
leaving the firm after finishing his term, was planning to list
the bonds on Nasdaq Dubai.
The developer has said it expects its debt restructuring to
be completed by the first half of 2011 and stated it would issue
term sheets for the Islamic bond. [ID:nLDE72M199]
Many of Nakheel's trade creditors who have been impacted by
the property downturn are in need of cash to pay their bills and
hence could be forced to take a hit, analysts say.
"If your business has been suffering for two years, you will
want to take that hit now because you need the cash, either to
pay debts or put into your own businesses," said Mohammed Yasin,
chief investment officer for CAPM Investments.
However, not all are in a mood to cash out fast.
Dubai developer Arabtec's ARTC.DU Chief Finacial Officer
Ziad Makhzoumi said the company had not been approached by any
buyers and does not have plans to sell the sukuk.
"Arabtec is not interested in selling its sukuk. We think
its a good one to keep," he said.
Asked if the price of 80 cents seems a reasonable discount,
he said, "If you have a new car and you are desperate to sell it
you will take a discount."
Nakheel, which overstretched itself building islands in the
shape of palms and other ambitious projects, is part of
state-owned Dubai World [DBWLD.UL] which has completed a $25
billion restructuring with banks. [ID:nLDE72M0PX]
(Additional reporting by Shaheen Pasha; Editing by David
($1=3.673 UAE DIRHAM)