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Mon 17 Sep 2012 04:11 PM

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Emirates plans bond sale to finance aircraft - exec

President Tim Clark says Dubai airline to issue bonds as part of broader financing strategy

Emirates plans bond sale to finance aircraft - exec
Emirates Airline President Tim Clark. (Getty Images)

Emirates, Dubai's flagship carrier and one of the world's biggest by passenger numbers, plans to issue bonds as part of a broader financing strategy for its aircraft orders worth billions of dollars.

"We have a fleet order to buy planes worth US$62bn, and for sure we will go to the markets to finance these orders, through various financial instruments," President Tim Clark said in an interview on Dubai television late on Sunday.

"Yes, we will issue more bonds in the coming period."

Clark did not provide a specific time frame for bond sales or the amount that the airline was looking to raise.

The airline, part of a matrix of state-owned firms referred to as Dubai Inc, last tapped global debt markets with a five-year $1 billion bond in 2011 with a coupon of 5.125 percent.

Returning investor confidence in Dubai and global demand for safe-haven debt have significantly tightened spreads since then, meaning a new bond issue under current market conditions would allow Emirates to lower its borrowing costs.

Its existing 2016 bond was yielding about 3.8 percent on Monday, according to Thomson Reuters data.

"We tell all the investors who plan to buy the bonds that it will be the right decision based on the company's financial position," Clark said.

Emirates' cash balance stood at AED15.6bn (US$4.25bn) as of March 31, 2012. In June, the company reported a 72 percent drop in 2011 net profit following a steep rise in fuel costs.

Emirates has issued Enhanced Equipment Trust Certificates (EETCs) this year, targeting mainly US investors, as part of its aircraft financing strategy. The transactions are similar to a form of secured debt financing, like mortgages.

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