Aldar Properties to sell debut sukuk



Aldar Properties, the UAE’s second-largest property developer by market value, said on Thursday it had mandated banks for its debut dirham-denominated Islamic bond sale.

An investor roadshow will begin on May 27, and will take in Abu Dhabi, Dubai, Bahrain and London, it said in a statement on the Dubai bourse website.

A Dubai-based banker who had previously been approached by Aldar to arrange the sale said it would be worth between $2 billion and $2.5 billion (Dh7.34bn and Dh9.18bn).

Aldar's Chief Financial Officer Shafqat Malik declined to outline the sale's value, but said it would be of benchmark size, which is typically at least $500 million.

"It's for financing our projects; we have a huge pipeline," Malik told Reuters.

The property firm, with about $65 billion worth of projects in the pipeline, has been raising funds to spearhead the Abu Dhabi government's drive to develop residential and leisure districts in the world's fifth-largest oil exporter.

Aldar is the latest borrower to return to the Islamic bond, or sukuk, market with a dirham issue after bond sales slowed in the second half of last year following defaults on US home loans and the ensuing global credit crunch.

Expectations that Gulf Arab states may revalue their dollar-pegged currencies to dampen soaring inflation has seen investors pile into Gulf securities denominated in local currencies, breathing life back into the sukuk market.

National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Barclays Capital, Credit Suisse, Dubai Islamic Bank, First Gulf Bank, Lehman Brothers and Noor Islamic Bank have been mandated as joint lead arrangers and bookrunners for the sale.

The bonds will be based on an ijara, or leasing structure. Islam bans interest, and bonds are based on physical assets such as property, which pays a rent to bondholders.

In April, the developer said it would sell Dh3.56 billion in convertible bonds to state-controlled investment firm Mubadala Development Co and agreed on a $599 million Islamic lending facility from a group of UAE banks.

Standard and Poor's Rating Services assigned the developer an A- long-term and A2 short-term corporate rating with a stable outlook on April 25.