Aldar to raise $1bn in sukuk sale

by Mohammed Abbas Thursday, 05 June 2008

Abu Dhabi's Aldar Properties, the UAE's second largest property developer by market value, set final pricing on Thursday for a $1 billion Islamic bond sale.

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The five-year Islamic bonds, or sukuk, were priced at 175 basis points above the three-month Emirates Interbank Offered Rate (EIBOR), a pricing statement sent to Reuters said, which also said there had been strong demand.
Three-month EIBOR is currently at 1.875%, Reuters data showed.

"Demand was very strong. We had a lot of interest regionally, domestically and internationally," one of the bankers who arranged the sale said.

The sale was worth 3.75 billion UAE dirhams ($1 billion), another arranging banker who declined to be named said.

Aldar has said it would use the money raised from the sale to finance its projects.

With about $65 billion of projects in the pipeline, the property company 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.

The pricing for the dirham-denominated bonds was at the top end of previously indicated price guidance.

The bonds have an ijara, or leasing structure. Islam bans interest and bondholders receive returns derived from underlying physical assets, such as rent from property.

Aldar is one of a crop of borrowers to return to the Islamic bond market with a dirham issue in recent weeks after bond sales slowed in the second half of last year. (Reuters)



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