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DUBAI, Sept 15 (Reuters) – The private arm of Sheikh Mohamed Bin Khalid al-Nahyan LLC (PD), a relatively small real estate firm owned by members of Abu Dhabi’s ruling family, has launched a $300 million deal at an 8.75 percent interest rate. Islamic bonds. Bank documents shown on Thursday.
PD withdrew its $350 million sukuk offering in July 2021 ahead of pricing, saying the interest it received was not in line with the company’s “plan and vision” to potential investors. read more
This time around, price guidance for the three-year sukuk was tightened from around 8.875% after more than $660 million in orders, including $358 million in interest from co-lead managers.
Doug Bitcon, head of credit strategy at Rasmala Investment Bank, said of price guidance: “It’s fair to price around these levels, but we’re not increasing our exposure to high-yield bonds and the subordination of sukuk is a concern.”
“If we’re going to go into high yield, we think there’s a more attractive risk/reward proposition out there.”
Standard & Poor’s last month assigned PD a “BB-” rating for its dollar-denominated sukuk program, in line with its long-term issuer credit rating.
“We understand that the initial offering under this program will be up to $400 million to repay existing bank debt and meet general corporate needs,” S&P said in a pre-trade report.
“If there is a significant reduction in issuance, we will reconsider whether this meets our subordination threshold.”
Unlike traditional debt, Islamic bonds do not pay interest, which is prohibited by Sharia law. Instead, they are structured to pay investors a return on the underlying asset.
The previously canceled deal kicked off at 5.5%, and the higher returns in the latest period reflect how much yields have risen since last year as central banks, led by the Federal Reserve, aggressively hike rates to rein in historical inflation levels.
PD, wholly owned by 11 members of Abu Dhabi’s ruling family, is headed by Sheikh Mohammed bin Khalid Al Nahyan, the ‘immediate cousin’ of UAE President Sheikh Mohamed bin Zayed Chairman, an investor report reviewed by Reuters showed. read more
Abu Dhabi Commercial Bank (ADCB.AD)Citi, Dubai Islamic Bank (DISB.DU)UAE NBD Capital (ENBD.DU)First Abu Dhabi Bank (FAB.AD)HSBC, JPMorgan, Kamco Invest (KAMC.KW)Comfort Capital (KFH.KW)Mashrek (MASB.DU) and Huaba Bank (WARB.KW) A sukuk sale, expected to be priced later on Thursday, is being scheduled.
Reporting by Yusuf Saba; Editing by Tomasz Janowski, Mark Potter and Kirsten Donovan
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