DFG's Islamic loan pays profit rate of 2%

Dubai Financial Group's, which is a unit of Dubai Group, $1.5 billion (Dh5.5bn), three-year Islamic loan pays a profit rate of 200 basis points (bps), a banker said yesterday.

The deal, which will be used for general corporate purposes, is available in UAE dirhams or Qatari riyals, as well as US dollars.

The murabaha facility is in general syndication and banks are invited to commit $75 million-equivalent as mandated lead arrangers for an upfront fee of 75 bps, $50m-equivalent as lead arrangers for 60 bps, or $20m-equivalent as arrangers for 40 bps. Commitments are due by July 15.

Arranging banks are Al Hilal Bank, Al Khaliji Commercial, First Gulf Bank, Noor Islamic Bank, Standard Bank and Royal Bank of Scotland.

In a murabaha deal a financier, such as a bank, buys a commodity and sells it to the customer at a higher price, complying with Islam's ban on interest.

Dubai Financial invests in financial services firms with a focus on south east Europe, the Middle East and north Africa and Asia, according to its website.

It holds stakes in companies including Greece's Marfin Popular Bank, Oman's largest lender Bank Muscat and Egyptian investment bank EFG-Hermes.

Dubai Group spokeswoman Huda Buhumaid declined to comment on the borrowing when contacted yesterday.


The number

$1.5bn: The debt Dubai Financial Group is planning to raise through murabaha