Aldar picks banks for $500m sukuk sale
Abu Dhabi, November 20, 2013
Abu Dhabi's largest property developer Aldar has hired five banks to arrange the sale of a benchmark-sized sukuk, to refinance debt, three banking sources said.
The proposed bond sale would be Aldar's first since it completed its Abu Dhabi government-backed merger with Sorouh Real Estate in June to create the second-largest listed property firm in the UAE and one of the biggest in the Middle East, with assets of $13 billion.
The majority state-owned firm has hired National Bank of Abu Dhabi, First Gulf Bank Dubai Islamic Bank, Standard Chartered and Goldman Sachs, the sources said.
Aldar plans to issue the sukuk before year-end, the sources added. Benchmark-sized typically means that the size of a bond will be at least $500 million.
"Post-merger, Aldar is adopting prudent and strategic measures to refinance and pay its debt, and a sukuk issuance is a logical step with the markets looking good," one banking source involved in the deal said.
When it was struggling during Abu Dhabi's property market crash, Aldar received government support worth around $10bn, to be paid in instalments over time, in exchange for assets including Abu Dhabi's Formula One track, a Ferrari-themed amusement park and residential property developments.
The firm is committed to reducing its debt pile, chief financial officer Greg Fewer had said in a conference call after posting third-quarter results.
Aldar's debt at the end of third quarter was Dh11.3 billion ($3.1 billion) maturing over the next 12 months, some of which the company plans to refinance, Fewer had said. It has a $1.25bn bond maturing in May 2014.
Aldar also refinanced two bank facilities totalling Dh4 billion, reducing its cost of borrowing significantly. These loans are currently undrawn and will be used for refinancing purposes.
The firm made a third-quarter profit of Dh407.5 million, nearly double the profit made a year ago. Real estate prices in Abu Dhabi dropped 50 per cent from their 2008 peak after a property bubble burst, causing many proposed developments to be stalled or scrapped.-Reuters