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Emaar Properties secures $1.5B Islamic loan

DUBAI/ABU DHABI: Emaar Properties has secured a $1.5 billion Shariah-compliant loan from five local lenders, two banking sources aware of the matter said Wednesday, the latest Dubai-based borrower to take advantage of buoyant markets to reprice debt.

A number of state-linked entities in the emirate have sought to refinance existing debts, even if the loans have years until maturity, as market sentiment toward Dubai improves after its debt crisis at the start of the decade and local banks look to focus excess cash on the emirate’s best-quality borrowers.

Emaar, developer of the world’s tallest building, has raised the seven-year facility which will pay 175 basis points over the London interbank offered rate, the sources said on condition of anonymity as the information isn’t public.

This is half the rate of the existing loan, which was due to run until 2016 and had an interest rate of 350 bps over Libor.

The funds have been provided on an equal basis by three Dubai lenders – Dubai Islamic Bank, Mashreq and Noor Bank – and two from Abu Dhabi – First Gulf Bank and National Bank of Abu Dhabi.

The lenders plan to market the transaction to other banks in a syndication phase, which could begin in the next two weeks, one of the source said.

“In the context of the proposed public offering of Emaar Malls Group, the company is in the process of assessing and optimizing its capital structure taking into consideration the best interests of all stakeholders,” Emaar, 29-percent owned by sovereign fund Investment Corp. of Dubai, said in a statement.

“The outcome of such process and relevant details will be included in the IPO prospectus and made available to the public.”

The developer announced plans to list up to 25 percent of its malls business in March, which is expected to raise 8 to 9 billion dirhams.

The new loan replaces an existing facility worth $980 million which was raised in 2011 and was secured against Dubai Mall – one of the world’s largest shopping malls – to help secure a lower borrowing rate.

 
A version of this article appeared in the print edition of The Daily Star on May 29, 2014, on page 5.
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Summary

Emaar Properties has secured a $1.5 billion Shariah-compliant loan from five local lenders, two banking sources aware of the matter said Wednesday, the latest Dubai-based borrower to take advantage of buoyant markets to reprice debt.

This is half the rate of the existing loan, which was due to run until 2016 and had an interest rate of 350 bps over Libor.

The funds have been provided on an equal basis by three Dubai lenders – Dubai Islamic Bank, Mashreq and Noor Bank – and two from Abu Dhabi – First Gulf Bank and National Bank of Abu Dhabi.


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