Islamic Finance News: Aldar Properties

Aldar Properties PJSC has raised 750 million by issuing a 5-year sukuk issued at par. At three and half times oversubscription there was considerable interest from investors in Asia, the Middle East and Europe.

Islamic Finance News: Aldar Properties

Islamic Finance News: Aldar Properties

The transaction, which represents Aldar’s first debt capital markets issuance since the merger with Sorouh, was priced very competitively at a spread of 290bps over USD Mid Swaps for a fixed profit rate of 4.348 per cent.

Earlier in the month, First Gulf Bank raised 500 million at a final price for the bonds at 180 basis points above interpolated midswaps (bps).

Aldar’s transaction is another important milestone in the company’s debt strategy focussed on reducing the cost of borrowing, extending its maturity profile and lowering it leverage levels. The sukuk follows the Dh4 billion in bank financings, announced on November 7, that carried an average margin of 1.3 per cent above base rate and an average maturity of three and half years.

These facilities remain undrawn at this time and will be used for refinancing purposes. This followed a successful margin reduction on a Dh2.1 billion syndicated loan during the second quarter 2013.

At the end of the third quarter 2013, total assets were Dh44.8 billion and gearing (net debt to equity) was 55 per cent. Aldar also continued to have a strong cash position with Dh6.3 billion of cash and available liquidity at the end of the third quarter. Abubaker Seddiq Al Khoori, chairman of Aldar, said the sukuk marks an important milestone for Aldar and we are pleased with the overwhelming response. Chief financial officer Greg Fewer added, “This transaction fits in well with our financing strategy as it reduces our cost of capital and expands the breadth and depth of our investor base.”

Aldar’s credit fundamentals are very strong and “The market has responded so positively to our first capital markets transaction since the merger with Sorouh,” he said.

Aldar’s improved credit profile was marked out recently by Moody’s and Standard & Poor’s (S&P) who both significantly upgraded their ratings on the Company. Moody’s moved Aldar three notches from B1 to Ba1 with a positive outlook.

This was on top of the one notch upgrade in July. S&P raised Aldar to BB, a two notch upgrade.

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