Dubai Real Estate Bonds Are Starting to Fall Into Distress

Two Dubai property developers have seen their Islamic bonds, or sukuk, fall into distressed territory, with investor concern mounting over credit quality and refinancing risks as the war in the Middle East rolls on for a fourth week.

Six dollar-denominated sukuk issued by property firms were indicated at distressed levels, or trading with a yield spread of over 1,000 basis points above the risk-free rate, according to data compiled by Bloomberg as of Tuesday’s close. In total, they represent about 15% of dollar real estate bonds in the Middle East.