ABU DHABI: Dana Gas, whose bondholders include BlackRock Inc and Ashmore Group Plc, completed restructuring $920 million of Islamic bonds, paying twice the average yield on emerging markets corporate sukuk.
Dana Gas, which missed payments in October, will split the Shariah-compliant debt into $425 million of convertible bonds and an equal amount into ordinary sukuk, the Sharjah-based company said in a statement to the Abu Dhabi stock exchange on Monday.
The five-year convertible bonds will pay a profit rate of 7 per cent and non-convertible 9 percent. The average combined profit rate of 8 percent compares with 7.5 percent on the sukuk sold in 2007.
The company will pay bondholders $70 million in cash and the collateral on the new sukuk will be enhanced by $300 million, including receivables from Egypt and certain UAE assets, it said. Dana Gas will also have the option to pay down the outstanding principal amount of securities prior to their maturity on Oct. 31, 2017.
Dana Gas was forced to restructure the debt after political instability in Egypt and Iraq’s Kurdish region, where the company produces most of its gas, led to payment delays. The gas producer reported a 27 percent decline in third quarter profit and 12 percent drop in net revenue.
The yield on Dana Gas bonds dropped 197 basis points, or 1.97 percentage points in November, the biggest monthly decline in more than three years, to 9.56 per cent after the company reached a preliminary deal with bondholders. The average yield on emerging company sukuk dropped to an all-time low of 3.09 per cent on Dec. 7, HSBC/Nasdaq Dubai’s Corporate US Dollar