Abu Dhabi-based telecoms firm Emirates Telecommunications Corp (Etisalat) is planning its first ever sukuk issuance in a follow-up to its debut conventional bond earlier this year, bankers told IFR.
The firm, rated Aa3/AA-/A+, is in talks with banks for the potential Islamic bond issuance, proceeds of which are set to go towards infrastructural improvements of its telecommunications network.
The company will have the documents ready in the coming weeks, but the deal is more likely to be launched in early 2015, added the bankers.
"This issuer is going to be opportunistic as it is pretty cash generative, and the way the market is, I can't see them coming this year," said one Gulf-focused banker, referring to a recent widening of credits in the region.
"But the docs are pretty much ready so if there is a massive turnaround, they have the capability to hit the market very quickly," he added.
The initial indications are that the company will not raise much more than US$500m from the trade, said one Dubai-based debt capital markets banker.
"It is going to be a small deal, probably around benchmark . Certainly nothing like the last trade," he said.
The telecoms firm completed a US$4.25bn-equivalent dual-currency four-tranche deal in June, a trade that was launched to support the acquisition of a majority stake in Maroc Telecom.
Etisalat wanted to raise the Maroc funds by issuing sukuk, but the Islamic market did not have the same depth as the conventional market, the bankers said.
The fact that euro investors were bullish on emerging markets at the time helped convince the issuer to issue a conventional bond denominated both in US dollars and in euros. However, it remains keen to establish a benchmark in the Islamic bond market.
Deutsche Bank, Goldman Sachs, HSBC and RBS were the active leads on the conventional bond deal, while Mitsubishi UFJ, Morgan Stanley, Natixis and National Bank of Abu Dhabi were passive bookrunners.
(Reuters / 10 October 2014)---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com