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DUBAI: Dubai-based property developer Damac sold $400 million worth of three-year Islamic bonds on Tuesday, as the emirate’s property sector rebounded strongly.
Sukuk was priced at 7.75%, tighter than earlier guidance of around 7.875%, as orders topped $1.15 billion, a bank document showed.
The question follows a series of investor calls and meetings that began last week for a benchmark-sized sale, generally considered to be at least $500 million, according to a filing from an authorized bank.
However, the company plans to raise $400 million from the sale, and its management told Reuters in an email that the proceeds will be used to “fund land acquisitions, maintain debt in its capital structure, and continue to work with Investors in the public sukuk space.” Damac’s projects target the high-end market as an influx of Russian money drives demand higher as the company seeks to capitalize on a post-Covid-19 property boom and Russia’s war in Ukraine.
Average residential prices in Dubai rose by 12.8% in the year to March 2023, according to a recent report by real estate services and investment firm CBRE.
Last year, DAMAC asked to be delisted from the Dubai stock market in 2021 as the impact of the Covid-19 pandemic weighed on the real estate company’s profitability.
A spate of Gulf debt problems this year has revived regional debt capital markets, but while many of the sales are sovereign or state-linked, DAMAC is a test of private sector appetite for corporate debt problems.
Investor demand for Sukuk and sustainability-related or green bonds has also spurred new issuance.
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