UPDATE 1-Nakheel bonds soar, Dubai CDS drop

LONDON, March 25 (BestGrowthStock) – Dubai World [DBWLD.UL]
subsidiary Nakheel’s Islamic bonds soared and the cost of
insuring Dubai’s debt plummeted on Thursday on a Dubai World
restructuring plan which included full repayment of Nakheel
debt. [ID:nLDE62O010]

Nakheel’s dirham-denominated Islamic bond due May 2010
(XS0361130148=DBAB: ) jumped 24.5 points to 94.5, and its
dollar-denominated Islamic bond due Jan 2011 (XS0335122106=R: )
soared 26.75 points to 92, its highest since July 2008.

The cost of insuring Dubai’s debt against default plunged 60
basis points in the five-year credit default swaps market to 360
bps, according to Markit.

This is the lowest since Nov 24, 2009, the day before
state-owned Dubai World announced a shock standstill on debt
payments.

“Over the last 2-3 days there has been accumulation of
Dubai-related credit protection and we saw some CDS buying ahead
of the statement, now people are closing long protection
positions,” said Luis Costa, director in emerging markets
strategy at Citi.

Other Dubai-related assets also rallied.

Dubai’s 2014 Islamic bond (AE046342208=: ) rose 1.69 points to
96.5 and Dubai World subsidiary DP World’s 2017 Islamic bond
(AE030740815=: ) rose 1.74 points to 92.5.

DP World’s five-year CDS slid 40 bps to 340 bps, and United
Arab Emirates’ capital Abu Dhabi’s five-year CDS fell 4 bps to
105 bps.

The full Nakheel bond repayment is contingent on creditors
accepting Dubai’s restructuring proposal.

Investment Research

(Reporting by Carolyn Cohn, Dinesh Nair and Sujata Rao, editing
by Mike Peacock)

UPDATE 1-Nakheel bonds soar, Dubai CDS drop