Emaar Properties PJSC (“Emaar”), rated B1/BB, has successfully priced its first international fixed-income offering, raising US$ 500 million via the issuance of trust certificates with a maturity of 5.5 years at a yield of 8.500%.
Emaar has successfully executed the first public offering out of the region in 2011 through the issuance of a very well-received US$ 500 million Sukuk. The transaction, which was structured as a Sukuk al-Ijarah and issued by a Special Purpose Vehicle (Emaar Sukuk Limited), constitutes the inaugural drawdown under the company’s recently updated US$ 2 billion Trust Certificate Issuance Programme.
Mohamed Alabbar, Chairman, Emaar Properties PJSC, said: “We are delighted that the Emaar Sukuk was well received by the regional and international fixed income investors. This is a testament to investors’ demand for Emaar’s value proposition and the credit standing of the company in the financial markets. The funds raised through the Sukuk will be used to implement our funding strategy and extend our debt maturity profile. The success of this issuance reflects the confidence investors have in our long term strategy and Emaar’s ability to implement it.” This offering represents Emaar’s first fixed-income offering, and follows the company’s US$ 500 million convertible bond executed last year. Emaar, one of the leading developers in the region and responsible for iconic landmarks such as Burj Khalifa and The Dubai Mall, is owned 31.22% by the Government of Dubai through Investment Corporation of Dubai. Over recent years, the company has consciously increased the contribution of malls and hospitality segments to its revenues while at the same time growing its international footprint.
Following a series of investor meetings arranged in Asia, the Middle East and Europe, Emaar was able to capitalise on the positive investor feedback, conducive market environment and relative lack of Shariah-compliant offerings in recent months to raise US$ 500 million from the international capital markets. HSBC, Standard Chartered Bank and the Royal Bank of Scotland acted as joint arrangers on the programme update and joint bookrunners on the offering. Dubai Islamic Bank acted as co-manager on the offering.
Emaar’s delegation at the investor meetings effectively communicated the credit story of the company and generated substantial interest in the offering. Ultimately, the company priced a 5.5 year US$ 500 million with a yield of 8.500% on the back of an orderbook of US$ 1,700 million. The proceeds of the fund raising exercise are intended to support Emaar’s general capital requirements and address up-coming refinancings.
Ultimately, the distribution profile was very well balanced, with European investors accounting for 52% of the transaction, while Middle East, Asian and US (offshore) investors accounted for 38%, 7% and 3%, respectively, of the issuance. In terms of investor type, the offering was distributed as follows: 60% for Fund Managers, 29% for Banks, 8% for Private Banks and 3% for Insurance Companies.