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Thursday, 29 May 2014

Investment Corporation of Dubai raises $1 billion from sukuk, bond issue

The Dubai Government’s principal investment arm, the Investment Corporation of Dubai, has successfully priced a $1 billion sukuk and bond issue, strengthening the fund’s capacity to invest amid a rising market.

The ICD made the announcement on Tuesday for the dual tranche issue comprising six-year $700 million sukuk and 10-year $300 million conventional bonds. The sukuk profit rate was set at 3.508 per cent per annum while the coupon for the conventional bonds was 4.625 per cent. The dual tranche offering was very well received globally and generated a substantial order book that was more than three times oversubscribed.

The sukuk and bond transactions were issued under ICD’s newly established Trust Certificate Issuance Programme and Euro Medium Term Note Programme, respectively. The newly established programmes are listed on Nasdaq Dubai and the Irish Stock Exchange.

Commenting on the transaction, Mohammed Ibrahim Al Shaibani, Executive Director & CEO of ICD, said: “The positive market environment provided an opportunity for ICD to access the debt capital markets, allowing a diversification of ICD’s sources of funding whilst enhancing its ability to actively invest, both domestically and internationally as growth prospects improve.”
“We are very pleased with the reaction the issuance received from investors. Its success clearly demonstrates both the strength of the ICD portfolio and business model, and the optimism and continued confidence in Dubai,” he added.

The dual tranche offering witnessed over 150 investors participating in the transaction. The sukuk offering saw the strongest demand from the Middle East which accounted for approximately 75 per cent of the sukuks, followed by Europe (17 per cent) and the remainder in Asia. On the other hand, the longer maturity 10 year conventional bond saw more than 30 per cent of the demand come from Europe. Asia and Offshore US investors accounted for seven per cent each, with the remainder placed in the Middle East.

Citigroup, Dubai Islamic Bank PJSC, Emirates NBD Capital, HSBC and Standard Chartered Bank acted as joint lead managers and joint bookrunners of the sukuk, while Citigroup, Emirates NBD Capital, HSBC and Standard Chartered Bank acted as joint lead managers and joint bookrunners of the conventional bonds. The Sukuk Certificate Programme was arranged by Citigroup, Dubai Islamic Bank and Standard Chartered Bank and the Euro Medium Term Note Programme was arranged by Citigroup, Emirates NBD Capital and HSBC.

(Khaleej Times / 28 May 2014)
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