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| 14 November, 2017

Qatar developer Ezdan's sukuk yields spike after S&P downgrade to junk

S&P cut the Qatari company by two notches to BB from BBB-minus and revised its outlook to negative from stable

Image used for illustrative purpose. Issuers of Islamic bonds are changing the language in documentation for new issues to reassure investors.

Image used for illustrative purpose. Issuers of Islamic bonds are changing the language in documentation for new issues to reassure investors.

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DUBAI - Yields on $500 million of Islamic bonds issued by Qatari real estate developer Ezdan Holding and maturing in 2021 have jumped by about 2 percentage points after Standard & Poor's downgraded the company to junk on Monday.

S&P cut the Qatari company by two notches to BB from BBB-minus and revised its outlook to negative from stable. The rating agency cited a weakening of the company's financial risk profile, partly caused by a deterioration of Qatar's operating environment after some neighbouring Arab countries imposed a boycott on it.

Ezdan's sukuk, issued in 2016, were yielding around 6 percent at the market's close last week; the yield has surged to over 8 percent, Tradeweb data showed on Tuesday.

The company made another $500 million, five-year sukuk issue in April this year. Yields on that bond have climbed from around 6.5 percent at the end of last week to 8 percent.

The sanctions have worsened a slump in Qatar's real estate market. Housing and utility prices sank 4.7 percent from a year ago in September, their biggest drop for at least several years, and fell 0.7 percent from the previous month, official data shows.

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(Reporting by Davide Barbuscia; Editing by Andrew Torchia) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))