Dubai's Jebel Ali Free Zone (Jafza) plans to raise $1.85 billion towards the redemption of its $2-billion Islamic bond this year by issuing another sukuk and obtaining an Islamic financing facility, a source familiar with the plan said on Tuesday.     

The source, who declined to be named ahead of any official announcement, said Jafza aimed to raise $650 million from the new sukuk and $1.2 billion from the Islamic facility.     

The Islamic facility is expected to be a borrowing arrangement from banks, banking sources had said earlier. The rest of this year's sukuk redemption would be paid for with Jafza's internal cash resources.     

The state-owned company's 7.5-billion-dirham ($2.04 billion) sukuk comes due in November, and bond holders voted last month to let Jafza repay the debt early.      

The Jafza sukuk is one of the major corporate debt maturities in Dubai this year, and a smooth redemption would increase confidence that the emirate is bringing its debt problems under control.     

Moody's Investors Service said in a report on Monday that the plan to raise new financing and repay the sukuk "would remove the existing refinancing risk that currently constrains Jafza's ratings and thereby provide the company with a sustainable capital structure and a materially improved debt maturity profile".     

Lead managers said last week that Jafza had picked seven banks to arrange its new sukuk issue. – Reuters