Bloomberg News

DIFC Investments Gets $1 Billion Facility to Repay Sukuk

June 04, 2012

DIFC Investments LLC, which owns properties in Dubai’s tax-free financial center, obtained a $1.035 billion syndicated facility from a group of banks to help pay a $1.25 billion Islamic bond due this month.

The dual-tranche Islamic financing includes both a commodity murabaha and an ijarah part, DIFC Investments said in a statement to Nasdaq Dubai today. Two thirds of the facility is in United Arab Emirates dirhams and the remaining in dollars, a spokesman for DIFC Investments said, declining to be identified because of company policy. The five-year facility is priced at 380 basis points, or 3.8 percentage points, above the Emirates/London interbank offered rates and is backed by DIFCI’s prime property portfolio, according to the statement.

Emirates NBD PJSC (EMIRATES), Standard Chartered Plc (STAN), Dubai Islamic Bank PJSC (DIB) and Noor Islamic Bank PJSC arranged DIFC’s facility, while Moelis & Co. acted as the company’s financial adviser. “The presence of regional and international banks in the transaction is an indication of the confidence and support that key stakeholders have in the success of the DIFC,” Abdullah Saleh, chairman of DIFC Investments, said in the statement.

DIFC opened in 2004 to attract international banks, asset managers and insurers and is home to the regional offices of Goldman Sachs Group Inc. (GS:US) and Standard Chartered Plc. Investors in DIFC’s sukuk and in Jebel Ali Free Zone FZE, another Dubai state-owned company, have been concerned about the entities’ ability to repay their maturing bonds after property prices in Dubai slumped more than 65 percent from a peak in 2008. Jebel Ali, a business park operator, has a 7.5 billion-dirham ($2 billion) sukuk maturing in November.

Arrangers

DIFC Investments sukuk tumbled to as low as 56 cents on the dollar in December 2009, according to data compiled by Bloomberg. The floating rate sukuk has risen 6.2 percent this year and was trading at 98.95 cents to the dollar at 4:16 p.m. in Dubai today, Bloomberg data shows. The sale of the debt in 2007 was managed by Goldman Sachs and Deutsche Bank AG.

Dubai, the second-biggest of seven states that makes up the United Arab Emirates, was on the brink of default in 2009 but has since completed several debt restructuring deals. Jebel Ali Free Zone last month received approval from sukukholders to repay the sukuk ahead of schedule and will hold meetings with fixed-income investors this week before a possible sale of securities to help repay the bond, a banker familiar with the transaction said June 1.

DIFC Investments posted profit from continuing operations of $185.4 million last year after a loss of $285.9 million in 2010. Revenue rose 8 percent to $157.5 million and it booked a fair value gain of $180.8 million on property.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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