Blue City gets rated

07 July 2006
Fitch has assigned expected ratings to a $900 million securitisation that will help finance phase 1 of the Blue City (Al-Madinat al-Zarqa) residential and tourism resort. The transaction is an inter-company loan expected to close in July. Blue City Investments 1 is the issuer of a $720 million floating-rate note rated BBB- and a $180 million fixed-rate note rated BB. The notes mature in 2016. The ratings 'address the timely payment of interest on the notes and the ultimate repayment of the principal by final legal maturity', Fitch said.

Fitch estimates phase 1 of the project, which includes the construction of 5,000 residential units, four hotels, two golf courses and retail and leisure facilities, will require a total investment of $2,100 million. The gross development value of residential properties due to be completed by 2013, when the principal payment is due, will be $3,000 million, according to Fitch. Residential sales are expected to finance repayments on the notes, with the remaining real estate and facilities as security.

The Blue City is a 34-square-kilometre mixed-use project under development along the coast at Al-Sawadi by Bahrain's AAJ Holdings. Al-Sawadi Investment & Tourism Company is developing the $15,000 million-20,000 million project (MEED 7:4:06).

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