Emirates sets price guidance for sukuk

23 March 2015

Airline is raising funds with UK export credit guarantees

  • Issue priced at about 100 basis points over midswaps
  • The 913m sukuk will be used to buy aircraft
  • UK Export Finance is providing guarantees for the sukuk

Dubai-based airline Emirateshas set the initial price guidance for its $913m sukuk issue, according to Reuters.

The newswire report adds that the ten-year Islamic facility will be guaranteed by Britain’s export credit agency and has been priced at about 100 basis points over midswaps. The average life of the bond – the average time before the principal is expected to be repaid – is 5.37 years.

The funds raised will be used to finance the airline’s pipeline of aircraft orders.

UK Export Finance provides financing and guarantees overseas in support of UK businesses.

Banks working on the deal are Citigroup, HSBC, JP Morgan and National Bank of Abu Dhabi as the joint structuring agents, with Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBDand Standard Chartered also acting as joint lead managers, the document showed.

Airbus, the provider of the large A380 jets Emirates flies, generates approximately 100,000 jobs in the UK and indirectly supports more than 400 businesses.

Other Gulf airlines have also raised Islamic bonds in the last year, with low-cost airline Flydubai listing a $500m sukuk on the Dubai Nasdaq at the start of 2015, marking the airline’s first sukuk.

Dubai’s government is supporting the growth of the emirate’s sukuk market as it aims to promote the emirate as major Islamic economy.

The UK’s government has also been keen to expand its presence in the Islamic finance market having raised its own sovereign sukuk issuance last June.

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