Abu Dhabi royals-owned firm opens books for revived sukuk sale

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DUBAI — The Private Department of Sheikh Mohamed Bin Khalid al-Nahyan LLC (PD), a relatively small real estate company owned by members of Abu Dhabi’s ruling family, has given price guidance in the 8.875% area for a sale of three-year sukuk expected to raise $300 million, a bank document showed on Thursday.

PD in July 2021 pulled a $350 million Islamic bonds sale ahead of pricing, saying the interest it received did not match the company’s “plan and vision” as laid out to potential investors.

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“Pricing is fair around those levels but we are not increasing exposure to high yield generally and the subordination of the sukuk is a concern,” said Doug Bitcon, head of credit strategies at Rasmala Investment Bank.

“If we are going into high yield, we think that there are more attractive risk/reward propositions out there.”

S&P last month assigned PD a ‘BB-‘ rating for its U.S. dollar-denominated sukuk program, in line with PD’s long-term issuer credit rating.

“We understand that the first issuance under the program will be up to $400 million to repay existing bank debt and fund general corporate needs,” S&P said.

Unlike conventional debt, Islamic bonds do not pay interest, which the Islamic law sharia forbids. Instead, they are structured to pay investors returns from underlying assets.

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Sources said last year that PD risked a change in outlook on its rating or a possible downgrade, as it set the size for the later-scrapped sukuk at $350 million after targeting up to $600 million.

Moody’s in July 2021 pulled its rating for PD and its issuance program “because the company decided not to proceed with its planned sukuk issuance,” the rating agency said at the time.

PD, which is fully owned by 11 members of Abu Dhabi’s ruling family, is chaired by Sheikh Mohamed Bin Khalid Al Nahyan, the “direct cousin” of UAE President Sheikh Mohammed bin Zayed, an investor presentation reviewed by Reuters showed.

Abu Dhabi Commercial Bank, Citi, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, JPMorgan, Kamco Invest, KFH Capital, Mashreq and Warba Bank are arranging the sukuk sale expected to price later on Thursday.

(Reporting by Yousef Saba; Editing by Tomasz Janowski and Mark Potter)

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