DUBAI: Emaar Malls Group, a unit of Dubai’s Emaar Properties, may price its debut sukuk yesterday inside comparable bonds as investors seek exposure to the emirate’s booming retail sector.
Bankers think Emaar Malls, which also plans an initial public offer of shares in coming months, will issue up to $1bn of 10-year wakala sukuk. Normally, a first-time issuer might expect to pay some kind of pricing premium, but that doesn’t look likely in this case.
By late yesterday, indicative pricing had already tightened to 190 basis points over midswaps from initial pricing thoughts of 200 bps over, with investor demand said to be very strong.
“As I understand, books are already in the $2bn plus range. My expectation would be a spread of around 175bps,” said Biswajit Dasgupta, chief investment officer at Emirates Investment Bank.
The firm owns Dubai Mall, one of the world’s largest shopping centres, which says it attracted over 75 million visitors last year.
Emaar Malls is making efforts to establish a “sustainable capital structure” in preparation for its stock market flotation, Moody’s said last week when it assigned the firm a credit rating of Baa2, two notches above the parent’s score.
“We are comfortable with the credit. It’s really a one-asset company right now, but that asset, Dubai Mall, is an excellent one. Plus the company is committed to maintaining investment grade ratings, which is an additional source of comfort,” said Abdul Kadir Hussain, chief executive at Mashreq Capital.
Traders see two possible comparables for the Emaar Malls issue. One is United Arab Emirates malls developer Majid Al Futtaim Holding, which issued a $500m, 10-year conventional bond in April at a spread of 195 bps over midswaps; the bond was trading at 180 bps over its Z-spread yesterday.
Majid Al Futtaim is rated in line with Emaar Malls, and investors may bid the latter up higher because of a lack of issuance in the Gulf during recent weeks.
Reuters
