Emirates airline sukuk is oversubscribed

30 March 2015

UK Export Finance provides guarantee on deal

  • Sukuk orders exceed $3.2bn
  • First time UK ECA has provided a guarantee on a sukuk issuance

Dubai-based Emirates Airline’s sukuk issuance attracted orders exceeding $3.2bn and was 3.6 times oversubscribed.

The $913m 10-year Islamic bond was guaranteed by the UK’s export credit agency (ECA), UK Export Finance. It is the first sukuk the UK agency has supported to date, as well as the largest capital markets offering in the aviation sector backed by an ECA guarantee.

The proceeds will be used to fund the acquisition of four Airbus A380-800 aircraft which will be delivered over the course of 2015.

The issuance was priced at a profit rate of 2.47 per cent, or 90 basis points over the mid-swap rate.

US bank Citigroup Global Markets, JP Morgan Securities, the UK’s HSBC Bank and the National Bank of Abu Dhabi acted as joint structuring agents and lead managers.

Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital and UK’s Standard Chartered were joint lead managers and Saudi Arabia’s NCB Capital was a co-lead manager.

The use of an ECA-backed sukuk is part of a range of financing options Emirates uses to fund its aircraft acquisitions, with loans, bonds, leasing and ECA-backed loans being other financing options explored.

The airline has also worked with other major European ECAs including France’ Coface and Germany’s Euler Hermes on aircraft acquisition deals.  

The sukuk certificates will be issued on 31 March and will be traded on the London Stock Exchange (LSE) and Nasdaq Dubai.

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