Dana Gas Promises to Honor Debt Payments Amid Concern on $1 Billion Sukuk

Dana Gas (DANA) PJSC said it will honor debt obligations as the United Arab Emirates-based energy company faces a $1 billion Islamic bond maturing in October.

“Dana Gas over the last four years has timely and consistently paid, on or before the due date, the sukuk profit amount and will continue to do so pursuant with its obligations,” the company said in a statement to the Abu Dhabi bourse today.

Dana Gas, with most of its output coming from Egypt and the Kurdish region of northern Iraq, appointed a financial adviser and will report financial results Jan. 31 and provide an operational update, it said. The company got a total of $177 million in payments from Egypt and the Kurdish region last year, it said today.

The shares gained 2.9 percent to 35 fils at 10:58 a.m. in Dubai, after plunging 24 percent this year. The yield on the 7.5 percent Shariah-compliant notes jumped 17 percentage points to 71.8 percent yesterday. The price sank to 63.92 cents on the dollar.

“The falling bond price made them react, although in terms of the announcement, it doesn’t say anything new,” Atul Gharde, a Hong Kong-based credit analyst at SJS Markets Ltd., said in an e-mail in response to questions from Bloomberg today. “The markets are not conducive for any capital market transaction or even refinancing at present. My guess is they will try to repay given the huge reputational risk.”

Mol Stake
Dana Gas’s board on Jan. 4 said it considered updates on its stake in Mol Nyrt. (MOL) as well as on financing projects in Egypt and the U.A.E., without giving further details. Its unlisted parent Crescent Petroleum Co. owns 3 percent of Mol, Hungary’s largest oil refiner, according to data compiled by Bloomberg.

Dana Gas may restructure its sukuk, or Islamic bonds that comply with the religion’s ban on paying and receiving interest, at 61.5 percent to their par value, Exotix Ltd. said in a report on Jan. 8. “We have little confidence in Dana’s ability to repay the $920 million sukuk,” the investment bank said, starting its coverage of the bonds at “sell.”


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