Dubai's Emirates may boost five-year bond issue to $1bn

Carrier initially proposed $500m issue; increased deal to be priced at 330 basis points, bankers say
CASH RICH: Emirates, which reported record profit of AED5.93bn for financial year ended March 31, has a cash pile of AED16bn (Getty Images)
By Bloomberg
Wed 01 Jun 2011 05:40 PM

Emirates, the
world’s biggest airline by international traffic, is said to be
increasing an issue of five-year bonds to $1bn and cutting the
yield spread offered to investors.

The
Dubai-based carrier initially proposed a $500m issue at a spread
of 350 basis points more than the benchmark mid-swap rate. The increased
deal will be priced at 330 basis points, according to three bankers
familiar with the sale who wouldn’t be identified before the issue is
completed.

“What we’ve
seen over the course of the week where the pricing guidance tightened to
midswaps plus 330 and upsized to $1bn shows the market’s
underlying confidence in the strength of credit by Emirates,” said Mark
Watts, head of fixed income at National Bank of Abu Dhabi’s asset management group, which manages AED4.1bn ($1.1bn). It’s a “testament to the fact that it’s a very supportive
market at the moment,” he said.

The airline
hired Deutsche Bank, Emirates NBD, HSBC Holdings and Morgan
Stanley to manage the sale. The airline plans to use the money as a
“security measure” to meet its obligations when the need arises, the
carrier’s President Tim Clark said May 29.

Emirates,
which reported record profit of AED5.93bn for financial year
ended March 31, has a cash pile of AED16bn.

“We are
still waiting on the final market response which will dictate whether we
go ahead with the bond. A decision on this is likely to be made today,”
Emirates said in an e-mailed statement.

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