ISLAMIC BONDS
Why Dana Gas declared its own sharia-compliant bonds unlawful
Dubai — A decision by a Middle Eastern gas producer to declare its own sharia-compliant bonds unlawful has baffled investors in the Islamic finance industry. Sharjah-based Dana Gas said on Tuesday it no longer considered its two Islamic bonds totalling $700m issued four years ago as sharia compliant under United Arab Emirates law. A court in Sharjah has since barred bondholders from taking any action against the company’s securities until it reviews Dana Gas’s application to have its debt declared "unlawful and unenforceable". "As creditors we understand that this is a liquidity and a payment issue, not a solvency issue — but clearly the company is trying to squeeze sukuk [Islamic bond] holders to the benefit of shareholders and that is a strategy that will end up hurting everybody down the road," said Abdul Kadir Hussain, head of fixed-income asset management at Arqaam Capital. Even if there were potential developments in Islamic finance that raised questions on the structure, "it ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.