UAE Company Stops Payments, Saying Its Own Islamic Bonds Are No Longer Shariah-Compliant

According to a report yesterday in Bonds & Notes, an Abu Dhabi based company, Dana Gas, announced last month that it is ceasing payments on its 4-year sukuk that are to mature in October.  The company says it is taking this action because the bonds are no longer Shariah-compliant. Investors say that the payment stoppage on the $700 million (US) issue was really a way to avoid default, and they believe courts will not uphold the company's action.  Apparently there are no centralized Shariah boards to approve Islamic finance deal structures in Arab countries, leaving open the possibility of issuers making their own rulings as here.