Text size:

  • Small
  • Normal
  • Large
The Abu Dhabi Government stepped in with $5.2bn of support for Aldar in January.
The Abu Dhabi Government stepped in with $5.2bn of support for Aldar in January.

Aldar stays credible even as shares sink

Aldar Properties' stock sank to a record low this week, but increasing bids for the company's bonds show investors are starting to see value in its debt.

ABU DHABI // Aldar Properties' stock sank to a record low this week, but increasing bids for the company's bonds show investors are starting to see value in its debt.

They are hoping that indirect involvement in the company by the Abu Dhabi Government will reduce the risk of any payment delays on its bonds and strengthen its credit portfolio - illustrating how in the Gulf, government connections, even implicit ones, can be important to investor perceptions.

The stock price reached an all-time low of 96 fils on Tuesday, down more than 90 per cent from its 2008 peak and well below this year's high of Dh2.48, as the property sector in the UAE continues to experience oversupply and falling prices.

"Aldar's core business is not doing well, and the company keeps raising the stakes with more projects with high execution risk," said Roy Cherry, a property analyst at Shuaa Capital in Dubai.

"The drop in Aldar's shares reflects in our view the weakness in outlook."

But it has been a different story in the past 10 days for the bonds. Aldar's US$1.25 billion 10.75 per cent 2014 bond was bid at 107.509 on Tuesday, yielding about 7.5 per cent, Thomson Reuters data shows; the yield has tumbled from above 9 per cent early this month.

Much of that improvement is thanks to a partial strengthening of global debt markets in the past 10 days, and Aldar's yield still has not returned to the 7.3 per cent level where it was hovering in the middle of last month.

But traders and analysts said some investors were hoping for the Abu Dhabi Government to play a greater role in the company, the biggest property developer based in the emirate, which still has a major part in Abu Dhabi's development plans.

Abu Dhabi stepped in with $5.2bn of support for Aldar in January.

As part of the rescue, Aldar was to place an issue of convertible bonds worth Dh2.8bn ($762.3 million) with Mubadala Development, a strategic investment company owned by the Abu Dhabi Government; four of Aldar's seven board members are from Mubadala.

The fund owns 28 per cent of Aldar, according to its first-half financial statements.

* Reuters

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National