DIFC Investments LLC, which owns properties in Dubai’s tax-free financial center, may have its credit rating cut at Standard & Poor’s due to “heightened refinancing risk” on its $1.25 billion Islamic bond due in June.
DIFC Investments “has little room for delays in its efforts to secure a bank loan and government support to refinance the sukuk,” the rating agency said in a statement. The B+ long-term and B short-term ratings were placed on creditwatch with negative outlook.
This is a potentially very serious situation since DIFC is controlled by the government of Dubai. Dubai can scarcely afford another Sukuk default after the rash of Sukuk defaults that rocked the Emirate in 2009, led by Nakheel. As we reported previously, UAE’s Dana Gas is trying to restructure its Sukuk as well.
Is this the start of a new round of defaults from the so-called “ethical” world of Shariah Finance???