Islamic bonds issued by Dubai property developers Binghatti Holding and Omniyat Holdings have fallen into distressed territory, according to Bloomberg, as investor concerns over credit quality and refinancing risks mount amid the ongoing conflict in the Middle East.
Six dollar-denominated sukuk linked to the two firms were trading with yield spreads exceeding 1,000 basis points above the risk-free rate as of Tuesday’s close, representing roughly 15 percent of dollar real estate bonds in the region. A 2027 issue from Binghatti was indicated as the most distressed among them.
Both firms’ sukuk rallied on Wednesday, with some recovering to below the distressed threshold.
The distress comes after Binghatti shelved plans for an IPO earlier this year, with chairman Mohammed Binghatti telling Asharq Business in January that the company’s financial position made a public listing unnecessary. The developer pointed to escrow accounts holding more than AED 10 billion and $1.5 billion raised through sukuk issuance.
In its statement to Bloomberg, Binghatti said that its construction sites remain fully operational and on schedule. The developer reported cancellation rates below 1 percent and weekly sales of approximately AED 500 million in March, consistent with pre-crisis levels.
Fitch Ratings has placed both Binghatti and Omniyat on watch for possible downgrades, citing geopolitical risk. However, the agency noted that both companies entered the recent period of volatility with solid balance sheets. Moody’s Ratings separately affirmed Binghatti’s rating last week, saying the firm has sufficient liquidity to cover its February 2027 maturity.
The wider sector has come under pressure since the war began, with the region’s primary bond market effectively shut, limiting refinancing options for lower-rated issuers. Before the conflict, UAE real estate bond issuance had reached nearly $7 billion in 2025, more than double the prior year’s record.
