Nakheel, a Dubai World company and one of the world’s largest real estate developers, listed today a two-year dirham denominated Sukuk (Islamic-compliant bond) on the Dubai International Finance Exchange (DIFX) valued at Dh3.6 billion.

The Sukuk will conform to the principles of Islamic Sharia and will be based on an Ijara (lease financing) structure. Dubai Islamic Bank, JP Morgan and NBD Investment bank were the lead managers and joint book runners for the transaction. Dubai World is guaranteeing the payment obligations under the Sukuk.

The deal came after an extensive roadshow which covered the UAE, Bahrain, Saudi Arabia, Qatar and the United Kingdom.  A total of more than 30 orders for in excess of Dh4.2 billion were received. Following initial price guidance of 6 month Emirates Interbank Offered Rate (EIBOR) + 2.25 per cent – 2.50 per cent bps, the transaction was priced at the tight end at 6 month EIBOR + 2.25 per cent bps.  The book closed at a size of Dh3.6 billion.

Kar Tung Quek, Nakheel chief financial officer, said: “Nakheel achieved land and property sales of approximately Dh23 billion in the first four months of this year compared with Dh20 billion in all of 2007 which has undoubtedly boosted investor confidence and demand for this Sukuk offering. Whatever may be happening in credit markets elsewhere, investors here are really seeing how robust the Dubai real-estate market is.''
 
The Middle East took the largest share of the offering (88 per cent), with the remaining going to international accounts. By account type, banks comprised 81 per cent of the order book, followed by fund and asset managers (15 per cent) and private banks (4 per cent).

In December 2006, Nakheel listed the world's largest Sukuk of $3.5 billion on the DIFX followed by a further $750 million Sukuk in January 2008. Nakheel also announced last month that profit had surged almost four-fold to $1.28 billion net income in 2007. - TradeArabia News Service