The Sukuk led by Dubai Islamic Bank will finance development of Emirates' new Engineering Centre and new Emirates Group Headquarters
Dubai - Dubai Islamic Bank (DIB), acting as the mandated lead manager for Emirates, successfully launched the world's first airline Sukuk bond.
The issue, oversubscribed by almost 50 per cent, was closed at USD $550 million as originally targeted. The deal was a joint effort of a prestigious consortium of local, regional and international banks, led by DIB. The issue was managed by a six-member group of banks acting as Joint Lead Managers including DIB, National Bank of Abu Dhabi, Gulf International Bank B.S.C., Standard Chartered Bank, HSBC and UBS.
Together with DIB, Standard Chartered and HSBC officiated as joint book-runners for the deal, skillfully rallying and securing participation in the markets. The Sukuk managed to attract wide investor participation from Europe as well as the Far East.
Sheikh Ahmed bin Saeed Al-Maktoum, Chairman of Emirates said: "We are very happy with the success of this major transaction. Emirates is the first airline in the world to have issued an international Sukuk Al-Musharaka wa Ijara and the first to issue a full 7-year term Sukuk bond. We especially appreciate the role played by the consortium of banks led by Dubai Islamic Bank in the successful outcome of this operation."
The USD $550 million Sukuk issue will have a 7-year maturity period with a semi-annual coupon, except the first coupon which is payable in 12 months. The sukuk has been priced at 0.75 per cent above the relevant USD LIBOR rates.
Dr. Mohammed Khalfan Bin Kharbash, Minister of State for Finance and Industry and Chairman of Dubai Islamic Bank PSC said: "DIB has demonstrated its expertise as the leading Islamic bank by bringing new and innovative Sukuks that meet the issuer's requirements. We have excellent working relations with all local, regional and international banks, who are always keen to participate in DIB-led Sukuks. We are proud to have worked with a leading company like Emirates to launch the world's first airline Sukuk."
At the closing, the Emirates Sukuk included as Co-lead Managers BNP Paribas, China Construction Bank Corporation (Hong Kong), Bank Julius Baer & Co. Ltd., Mashreqbank, Qatar National Bank SAQ and Societe Generale.
Pursuant to the terms of the issue, Wings FZCO (a special purpose issuer) issued US$ denominated floating rate trust certificates. Wings FZCO used the proceeds of the sukuk issue to contribute to a joint venture (musharaka) between Wings FZCO and Emirates. The joint venture will develop and lease to Emirates a new engineering centre and a new headquarters building on land situated near Dubai's airport. Profit, in the form of lease returns, generated from the joint venture will be used to pay the periodic coupon on the trust certificates. The Trust Certificates have been listed on the Luxembourg Stock Exchange.
Richard J. Amos, General Manager of the Investment Banking Division of the National Bank of Abu Dhabi said: "We have been involved in arranging many landmark issues in the past and are delighted to have acted as joint lead manager for the Emirates Sukuk. The huge success of the issue is a testament to the investors' confidence in Emirates and the UAE, and will lead the way for many more landmark deals in the future."
Abbas Ameeri, Managing Director, Merchant Banking of Gulf International Bank B.S.C. said: "GIB is delighted to be part of this landmark Sukuk financing for Emirates. The quality of the banks supporting the Sukuk issue as Joint Lead Managers is widely reflective of the confidence the wider financial market has in the credit standing of Emirates. It is also a reflection of GIB's commitment of to its valuable customer relationships"Iqbal Khan, Chief Executive, HSBC Amanah said: "The fact that Emirates was able to price a US $550m trade at 75bps is a testament to the credit strength of the airline and the standing that it commands in the international capital markets. As a Joint Bookrunner, HSBC Amanah is privileged to be associated with this successful Sukuk issue."
Ray Ferguson, Chief Executive UAE of Standard Chartered Bank said: "We are pleased to have jointly arranged the debut Sukuk for Emirates. This is a landmark deal and we aim to play an important role in the development of the Islamic industry and regional capital markets by bringing quality issuers to the Sukuk market."
Richard Luddington, Managing Director, UBS Investment Bank said: "The success of this transaction demonstrates the ever growing demand for Sukuk issues in the marketplace from high quality corporations".
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About Dubai Islamic Bank (DIB)
Established in 1975, is the first Islamic bank to have incorporated the principles of Islam in all its practices. DIB is a public joint stock company and its share is quoted on the Dubai Financial Market. The bank enjoys a reputation as a leader and innovator in maintaining the quality, flexibility and accessibility of its products and services. In a very short space of time it has created market leading services and products that are setting benchmarks for the rest of the sector.
The bank's recent financial results confirm the strength of its balance sheet and profitability. Figures for the year ending December 2004 reported a 36 per cent increase in net profits including depositors' profits, to reach AED 1.02 billion (US$278 million) compared to AED 751 million (US$205 million) for 2003. The bank's assets at the end of December last year had grown 35 per cent in the same period to AED 30.8 billion (US$8.3 billion), against AED 22.8 billion (US$6.2 billion) for the equivalent year previously.
The bank has been proactive in creating partnerships and alliances at local and international level. DIB has adapted an aggressive expansion strategy, which started with the establishment of DIB Pakistan Limited, a wholly owned subsidiary of DIB. The bank has also co-managed Pakistan's US$600 million first Sovereign Islamic bond issue that received a tremendous response from investors. The steps taken mark DIB's ambitious plans to roll out its operations into regional and international markets as part of its overall strategic plan.
DIB has also shown its outstanding capabilities by being appointed to provide specialist financial solutions for huge developmental projects within the UAE, one of which led to the world record US$1 billion Islamic bond issue. The issue was arranged for the Government of Dubai's Department of Civil Aviation to raise funding for the second phase of the expansion of Dubai International Airport. The bank also managed financing of US$350 million for Nakheel. The financing made further capital available to build on Nakheel's blue chip portfolio of developments such as The Palm in Dubai.
For further information, please contact:
Sameh Hamtini/ Tarek Fleihan
ASDA'A Public Relations
Dubai
UAE
Tel: +971-4-3344550
Fax: +971-4-3344556
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© Press Release 2005
