RAK Properties planning $2bn sukuk

An artist's impression of Mina Al Arab, one of RAK Properties' projects under development.

Ras Al Khaimah-based RAK Properties said on Wednesday it is planning to sell up to $2 billion of Islamic bonds early next year to finance new projects.

RAK Properties has yet to appoint banks to arrange the sale, Chief Executive Mohammed Sultan Al-Qadi told Reuters. The bond would raise between $1 billion and $2 billion.

A lingering credit squeeze triggered by defaults on US home loans prompted many issuers to shelve or postpone borrowing plans in July, and bankers expect most issuers to wait until early next year to hit the market.

Kuwaiti real estate firm Abyaar said last week it was looking to $700 million from a sukuk sale early next year.

The only borrower to announce a benchmark size sukuk sale to be held by the end of this year is Ras Al Khaimah Investment Authority, which is planning a roadshow in coming weeks. Benchmark is considered to be at least $500 million.

UAE-based energy company Dana Gas was earlier this month the first firm to sell a benchmark sized Islamic bond since July when the US mortgage meltdown spilled into global markets.

But its size had been reduced to $875 million from a planned $1 billion, and bankers said the sale had been made privately to avoid risking pricing dictated by a risk-averse market.

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