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UAE’s Aldar Properties Prices Islamic Bonds | ASHARQ AL-AWSAT English Archive 2005 -2017
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MANAMA, (Reuters) – Abu Dhabi’s Aldar Properties, the United Arab Emirates’ second largest property developer by market value, on Thursday set final pricing for Islamic bonds worth at least $800 million.

The five-year Islamic bonds, or sukuk, were priced at 175 basis points above the three-month Emirates Interbank Offered Rate (EIBOR), a pricing statement sent to Reuters on Thursday said, which also said there had been strong demand.

Three-month EIBOR is currently at 1.875 percent, Reuters data showed.

“Demand was very strong. We had a lot of interest regionally, domestically and internationally,” one of the bankers who arranged the sale said. He declined to be named.

The size of the sale has yet to be finalised, but will be worth at least 3 billion dirhams ($817 million) the banker said.

Two arranging bankers told Reuters in May it could range from benchmark size to $1.5 billion in value, depending on demand. Benchmark size is typically at least $500 million.

Aldar has said it would use the money raised from the sale to finance its projects.

With about $65 billion of projects in the pipeline, the property company has been raising funds to spearhead the Abu Dhabi government’s drive to develop residential and leisure districts in the world’s fifth-largest oil exporter.

The pricing for the dirham-denominated bonds was at the top end of previously indicated price guidance. The bonds have an ijara, or leasing structure.

Islam bans interest, and returns derived from underlying physical assets, such as rent from property, are paid to bondholders.

Aldar is one of a crop of borrowers to return to the Islamic bond market with a dirham issue in recent weeks after bond sales slowed in the second half of last year.

A global credit crunch triggered by defaults on U.S. home loans had prompted several Gulf borrowers to postpone issuance.

Expectations that Gulf Arab states may revalue their dollar-pegged currencies to dampen soaring inflation has seen investors pile into Gulf securities denominated in local currencies, breathing life back into the sukuk market.

Abu Dhabi Commercial Bank, Barclays Capital, Credit Suisse, Dubai Islamic Bank, First Gulf Bank, Lehman Brothers, National Bank of Abu Dhabi and Noor Islamic Bank arranged the sale.