Saudi's Dar Al Arkan set to sell sukuk this week

  • Share via facebook
  • Tweet this
  • Bookmark and Share
Dar Al Arkan chairman Jousef Al Shelash.

Dar Al Arkan chairman Jousef Al Shelash.

Saudi real estate developer Dar Al Arkan aims to return to global debt markets after more than three years this week with an Islamic bond, aiming to take advantage of low borrowing costs to finance future growth.

The company plans to raise at least $500m from the five-year sukuk, which will be marketed to global investors from Monday onwards, arranging banks said. Early price guidance for the deal was for a yield of 6.25 percent, they said in a statement sent to investors.

"Dar Al Arkan's upcoming sukuk should receive adequate demand in the 6.25 percent area, given its rarity premium and the company's recent deleveraging and strong track record with creditors," said Gus Chehayeb, director of Middle East and Africa corporate research at Exotix in Dubai.

However, Chehayeb cautioned that the pricing could have been higher as there was some concern in the market that Dar Al Arkan will follow up the issuance with a generous dividend.

Shares in Dar Al Arkan rose 14.4 percent in the first two days of trading this week, taking year-to-date gains to 15.8 percent.

Dar Al Arkan last tapped markets for a five-year US dollar sukuk in 2010 when it priced a $450m deal at 10.75 percent. The transaction, the first ever bond from a Saudi entity available to investors in the United States, came at the height of a regional property slowdown and Dubai's credit crisis, which affected sentiment across the region.

Since then however, a recovery in the sector, boosted by prospects for the implementation of a new mortgage law in Saudi, as well as rising demand for regional debt, has allowed Dar to substantially lower its funding costs.

The 2015 paper was bid at 110 cents on the dollar on Monday, according to Thomson Reuters data, to yield 4.6 percent, down from about 6.2 percent at the beginning of the year.

Earlier this month, Standard & Poor's changed the outlook on its B+ rating on Dar Al Arkan to positive.

Bahrain-based Bank Al Khair, Deutsche Bank, Emirates NBD, Goldman Sachs and Qatari pair Masraf Al Rayan and QInvest are mandated joint bookrunners on the sukuk, which is due to price this week.

Related:

Market Performance

Dar Al Arkan Real Estate Development Company
15.7
0.01 0.06 (%)
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Finance talk with RAKBANK

Finance talk with RAKBANK

StartUp sat down with RAKBANK’s head of personal banking, Ian...

Tips from the top: Hisham Al Gurg

Tips from the top: Hisham Al Gurg

High profile investor and entrepreneur Hisham Al Gurg discusses...

1
The hubsters' ecosystem

The hubsters' ecosystem

Tamara Pupic visits Impact Hub Dubai, the first local branch...

Most Discussed
  • 24
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held accountable...so thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 23
    Baby NOT on board?

    Some of you cry babies need to get your own personal apartments on the plane ! You cry more then the babies I have seen in my travels. LOL more

    Thursday, 28 August 2014 9:10 AM - Jim
  • 21
    Israel “must be punished” over Gaza, says Dubai police chief

    This high moral ground that Mick is talking abt sound very familiar. May I remind Mick that the US & its British ally alone killed over 1 million innocent... more

    Thursday, 7 August 2014 4:12 PM - Mathew