Dubai’s Jebel Ali Free Zone (Jafza) has picked seven banks to arrange a new Islamic bond, lead managers said yesterday, with at least $500 million likely to be raised to part-repay the firm’s 2012 sukuk obligation.
Along with a $1.25 billion sukuk issued by another state-owned entity, DIFC Investments, due in June, the Jafza redemption was considered crucial to assess the ability of Dubai Inc firms to meet their debt maturities.
Dubai is trying to rebuild credibility with investors who fled the region after state-owned conglomerate Dubai World
shook markets in 2009 with plans for a $25 billion debt restructuring.
Jafza, fully-owned by the Dubai government, mandated Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered to arrange a series of roadshows, a document from the lead banks said.
The investor meetings will begin on June 5 in the UAE and then take in Singapore and Hong Kong on June 7 and 8 respectively. Two days of roadshows will also be held in London on June 11 and 12.
A benchmark-sized sukuk will be issued subject to market conditions, the document added, with any issue to come from the Jafz Sukuk (2019) special purpose vehicle — indicating a seven-year sukuk is being proposed.
Benchmark-sized is understood as at least $500 million.
The proceeds from the issue will be used to help refinance the Dh7.5 billion ($2.04 billion) sukuk which had been due to be repaid in November, a source with knowledge of the matter said. Bondholders voted last week to allow Jafza to repay the deal early.
Repayment of the sukuk will come through a mixture of a loan, a sukuk and internal cash.