Emirates airline, Dubai’s flagship carrier, has hired six banks to arrange a potential dollar-denominated, benchmark sukuk sale, lead arrangers said yesterday, in what would be its second bond sale this year.
Emirates, owned by the government of Dubai, picked Citigroup Inc, Standard Chartered, Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank and ENBD Capital for the planned sale.
Dubai, which is recovering from a property-led crisis in 2009, is taking advantage of improved investor sentiment and strong liquidity in the Islamic bond market to raise financing for its state entities at relatively cheaper rates.
Investment Corp of Dubai, the emirate’s main financial vehicle, is in talks with banks to launch its first Islamic bond issue, sources with knowledge of the matter told Reuters last week.
Dubai itself raised $1.25bn in January in an oversubscribed dual-tranche bond sale, which included a $750mn Islamic tranche.
Last week, another state-owned entity, Dubai Electricity and Water Authority, returned to global debt markets after an absence of more than two years. Its $1bn Islamic debt deal attracted order books of $5bn and the bulk of it, about 65%, was allocated to the Middle East. The utility printed the five-year paper at par at a profit rate of 3%.
Emirates will hold investor meetings in the UAE and Europe commencing March 7, according to lead arrangers. The meetings will kick-off in Dubai and neighbouring Abu Dhabi on March 7, followed by Geneva and Zurich on March 8th and closing in London on the 11th.
Benchmark-sized transactions are at least $500mn.
Emirates launched a $750mn, 12-year amortising bond in late January but received a tepid response compared to its last issue in June 2011. Market players said at the time that the unusual amortising structure had kept regional investors away.