Dana Gas may become first UAE firm to fail sukuk payment

DUBAI - Radikal

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Dana Gas is set to become the first United Arab Emirates (UAE) company to fail payment of an Islamic bond on maturity, three sources familiar with the matter told Reuters yesterday.

The UAE’s largest listed natural gas firm, hit by payment delays from Egypt and the Kurdistan Regional Government (KRG) in northern Iraq, will not repay a $920 million convertible Islamic bond, or sukuk, when it matures today, the sources said.

However, Sharjah-based Dana has won more time to hammer out a deal with bondholders, they added.
Dana Gas declined to comment.

Although indebted firms in the Gulf Arab state have extended maturities on billions of dollars in bank loans since the onset of the financial crisis in 2008-09, no sukuk have been restructured or unpaid on maturity so far.

Dana has a $1 billion sukuk maturing on Oct. 31. It repurchased about $80 million of the sukuk in 2008, leaving $920 million outstanding.

The five-year sukuk, which was issued with a 7.5 percent coupon, has gained international interest as a large chunk of the debt is owned by large investment firms including BlackRock Inc, Ashmore Group and Spinnaker Capital.

There is “absolutely no chance” of a white knight swooping in to repay the bond by the due date, a source close to the talks said. In 2009, the Abu Dhabi government stepped in at the eleventh hour to help Dubai repay developer Nakheel’s $4.1 billion Islamic bond.