Abu Dhabi royals-owned real estate firm sells $350mln sukuk

Final price guidance was between 5.5% and 5.625%

A general view shows the beach road in the UAE capital Abu Dhabi in this December 2006 file photo.

A general view shows the beach road in the UAE capital Abu Dhabi in this December 2006 file photo.


DUBAI - The Private Department of Sheikh Mohamed Bin Khalid Al Nahyan LLC (PD), a relatively small real estate player in Abu Dhabi owned by members of its ruling family, sold $350 million in five-year Islamic bonds on Wednesday at 5.5%, a document showed.

The sukuk were tightened from initial price guidance of around 5.75% after orders of more than $900 million, the document from one of the banks showed.

The company, which owns a portfolio that is focused 90% in the United Arab Emirates capital with the rest in neighbouring Dubai, will use the proceeds to fund capital expenditure and acquisitions, S&P Global Ratings has said.

Two sources familiar with the matter had told Reuters the sukuk would largely refinance existing loans, one of them adding the sale would likely be around $500 million.

The Gulf rarely sees private companies tap the international debt markets, and one of the sources said the deal would pave the way for new issuers.

The firm is expected to return to the debt markets, the goal being to eventually issue medium- to long-term debt, the source said.

The property market in the United Arab Emirates - a significant component of the country's gross domestic product - suffered last year amid the coronavirus crisis, with prices in Abu Dhabi and Dubai falling sharply.

S&P assigned PD a grade 'BB' long-term issuer rating, constrained by its "limited portfolio size in a fragmented and weak Abu Dhabi real estate market and its high leverage," but "supported by good asset quality, locational advantage, and strong shareholders."

PD said in an investor presentation reviewed by Reuters that its "strong relationship with the Abu Dhabi government" gave it priority assistance in receiving re-zoning and planning approvals, as well as support, financial and in-kind contributions, and other benefits.

Emirates NBD Capital and First Abu Dhabi Bank acted as global coordinators, while Abu Dhabi Commercial Bank, Dubai Islamic Bank and Mashreqwere also involved in the deal.

(Reporting by Yousef Saba; Editing by Christopher Cushing and Elaine Hardcastle) ((Yousef.Saba@thomsonreuters.com; +971562166204; https://twitter.com/YousefSaba))

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