UAE's Tamweel mulls debt market move

Mortgage lender's acting CEO says it might go back to the market this year for sukuk
UAE's Tamweel mulls debt market move
By Bloomberg
Mon 16 Apr 2012 06:29 PM

Tamweel may consider tapping the debt market again this year after the UAE mortgage lender raised $300m from the sale of Islamic bonds in January.

“We may potentially go back to the market this year for either a sukuk or securitization,” acting CEO Varun Sood said in an interview in Dubai on Monday.

“It would be a similar transaction to what we did earlier this year.”

The mortgage company, controlled by Dubai Islamic Bank, sold $300m in sukuk in January, its first offering since 2008.

Sales of Islamic debt in the Gulf surged to $8.46bn this year from $1.53bn in the year-earlier period as borrowing costs tumbled to a five-month low.

Average yields on sukuk from the six-nation Gulf Cooperation Council declined 41 basis points this year to 3.898 percent on March 29, the lowest since October.

The rate was at 3.93 percent on April 13, the HSBC/Nasdaq Dubai GCC US Dollar Sukuk Index shows.

Tamweel has AED3.3bn ($900m) of outstanding debt, including a $300m Islamic bond due January 2013, according to data compiled by Bloomberg.

The company is “preparing to meet all our commitments, but there’s been no decision whether we’ll refinance or repay the sukuk in January 2013,” Sood said.

Tamweel, which along with fellow Islamic lender Amlak provided almost 90 percent of all mortgages in the UAE, halted lending in October 2008 after the global credit crisis blocked its access to funds.

The company resumed lending in November 2010 after Dubai Islamic Bank, the UAE’s biggest bank that complies with Muslim banking rules, raised its stake in Tamweel to 58 percent to help boost the mortgage market.

Mortgage transactions at Tamweel rose 10 percent to 15 percent during the first quarter of the year from a year earlier, in line with the Dubai mortgage market as prices started to recover, Sood said.

“It’s been good news so far this year,” he said. “Prices have been rising, and villas are clearly leading the recovery.”

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