Nakheel, controlled by state-owned Dubai World, may issue as much as $3.2 billion of five-year sukuk to pay contractors as part of its debt restructuring plan, JPMorgan Chase & Co. said in a report Aug. 26. Islamic debt issues from the Gulf have slumped 24 percent to $2.5 billion this year, according to data compiled by Bloomberg.

Contractors are likely to sell Nakheel’s sukuk to pay bills, Thomas Barry, chief executive officer of Arabtec Construction LLC, a unit of Arabtec Holding Co., the United Arab Emirates’ biggest construction company, said in an interview Sept. 2. “All contractors are in very bad situation with regard to cash flow because of nonpayment from many entities.”

Nakheel, which has built palm tree-shaped islands off Dubai’s coast, said July 14 a group of its creditor banks supported a plan to alter the terms on $10.5 billion of loans and unpaid bills. In April, the company said its trade creditors would be offered 100 percent recovery of their claims -- 40 percent through a cash payment and 60 percent in the form of a tradable sukuk.

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