Jafza secures loan commitments

11 April 2012

Commitments already in for Jafza $1.2bn loan deal before syndication starts

Jebel Ali Free Zone (Jafza) is close to securing enough commitments from banks for a AED4.4bn ($1.2bn) loan that will be used as a major part of the refinancing of a AED7.5bn sukuk (Islamic bond) that matures in November.

The commitments have come from a small group of banks invited to participate in the loan in mid-March when Jafza first presented it refinancing plans, and come prior to a wider syndication being launched, planned to start in mid-April.

The deal is expected to be priced at about 4.25 per cent, falling to 3.75 per cent over its tenor. That the loan has managed to secure such large commitments prior to being syndicated more widely is being taken by bankers as a sign the company will be able to refinance the November maturity without much difficulty.

“Banks are already showing support for Jafza and its refinancing plan, so they should not have any trouble repaying the sukuk,” says one banker in Dubai.

Banks currently involved in the deal include Emirates NBD, Dubai Islamic Bank, the UK’s Standard Chartered and the US’ Citigroup.

The sukuk will be repaid by the new loan, along with a new AED2.4bn sukuk. The outstanding amount, about $200m, will be repaid by the company. Jafza is hoping to have both the loan and the sukuk closed before Ramadan starts in mid-July, with one banker close to the deal saying the completion of the sukuk is one of the conditions precedent of drawdown on the loan, although the loan is expected to be finalised first.

Jafza did not respond to requests to comment.

The Jafza sukuk has been identified by rating agency Moody’s as one of two debts at Dubai government-owned firms maturing this year that could need government support if they are to be repaid.

The other is DIFC Investments, the investment arm of the Dubai International Financial Centre, which is planning to raise a $900m loan to help refinance a $1.25bn sukuk maturing in June.

In the past few weeks there has been a flurry of activity as Dubai government-linked firms try to tackle their debts. Most recently, Drydocks World began legal action that would enable it force through a $2.2bn debt restructuring plan.

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