Dubai Financial Market PJSC: A Closer Look at the Recent Board Announcement

Dubai Financial Market PJSC, a leading financial institution in the UAE, has recently made headlines with a significant announcement from its subsidiary, the National Central Cooling Company PJSC (Tabreed). The Board of Directors has invited shareholders to its annual general assembly meeting, scheduled for Tuesday 19 March 2024, where a special resolution will be considered. This resolution, if passed, would permit the Board to issue non-convertible bonds and/or sukuk up to a total value of USD 1 billion for a period of 12 months.

While the potential issuance of bonds and sukuk may provide an influx of capital, it's crucial to consider the current financial standing of the company. Over the past three months, the company has seen a yield of -0.04%, and a 1-month yield of -0.01%. These negative yields indicate a decline in the company's profitability, which is a concerning sign for potential investors.

Despite being backed by the Government of Dubai, which owns 80% of DFM through Borse Dubai Limited, the company's future outlook seems uncertain. The current market cap of 10,800,000,000, while substantial, does not necessarily equate to future success, particularly in light of the current economic climate and the company's declining yields.

Given these factors, potential investors should exercise caution. The potential for capital influx from bond and sukuk issuance may not be enough to offset the company's negative yield trend and uncertain future outlook.