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Dana Gas Bid to Void Shariah-Compliant Debt Stuns Analysts

United Arab Emirates company’s move to declare its bonds unlawful raises questions for sukuk market.

A decision by a Middle Eastern gas producer to declare its own Shariah-compliant bonds unlawful has baffled investors in the $2 trillion Islamic finance industry.

Sharjah-based Dana Gas PJSC said Tuesday it no longer considered its two Islamic bonds totaling $700 million issued four years ago as Shariah compliant under the United Arab Emirates’ law. A court in Sharjah has since barred bondholders from taking any action against the company’s securities until it reviews Dana Gas’s application to declare its debt “unlawful and unenforceable.”

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