Dubai Entities Turn to Mandatory Convertible Bonds (MCBs) Amid High Interest Rates

In a rough economic environment characterised by high interest rates, a few Dubai-listed companies have resorted to the issuance of Mandatory Convertible Bonds (MCBs) as a key strategic finance tool.

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Drake & Scull International (DSI) – The MCBs by April were an initiative in a proactive sense, considering that the realms of debt write-off and ongoing financial restructuring continue.

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Investor Sentiment: Since long-term growth potential is still there for such companies, very high default probabilities entice investors.

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Cost Efficiency: It costs less to issue MCBs than to borrow through more conventional means.

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Regulatory Framework: SCA implements regulations to protect the interest of investors.

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Financial Landscape: Continued heavy reliance on MCBs likely if interest rates persist.

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