DIFC Investments LLC (“DIFCI”), rated BBB- (stable) by Standard & Poor’s, successfully priced a $700 million 10-year Sukuk issued at par with a 4.325 per cent profit rate. The transaction, which represents DIFCI’s return to the debt capital markets since its issuance in 2007, was priced at a spread over USD Mid Swaps of 185bps. DIFCI’s transaction has effectively re-opened the international debt capital markets for regional corporate issuers given that it is the first US dollar-denominated benchmark issuance by a regional corporate since July 2014.
Ahead of the Sukuk issuance, DIFCI was assigned a BBB- issuer credit rating by S&P. Shortly after receiving its credit rating, DIFCI undertook an extensive marketing strategy covering Abu Dhabi, Dubai, Hong Kong, Singapore, and London. The main aim of the roadshow, during which DIFCI met with over 50 fixed income investors, was to highlight to investors DIFCI’s improved credit fundamentals and robust business model.
The orderbook opened on Monday, 3 November during London morning with initial profit talk set at USD Mid Swaps plus “very low 200s” for a 10-year benchmark-sized Sukuk. The order book quickly gained momentum and was in excess of $1.9 billion by London close of business. The strong investor interest was sustained throughout Asia open and the orderbook grew to approximately $3.0 billion. Thereafter, DIFCI launched and priced a $700 million Sukuk at USD Mid Swaps plus 185bps, following one additional iteration to price guidance with the orderbook closing circa $3.0 billion, representing approximately 4.3 times oversubscription.
HE Essa Abdulfattah Kazim, Governor of DIFC, said, “We are extremely pleased with the success of this transaction. The Sukuk represents a milestone in DIFC’s credit story and acts as a testament for the improved credit fundamentals of the company. We are also delighted to have played an important role in supporting the development of Islamic Finance in Dubai by undertaking a sole listing on NASDAQ Dubai with a view to reinforce the vision of H.H. Sheikh Mohammed bin Rashid Al Maktoum of Dubai as the global hub of Islamic Finance. Ultimately, the success of the transaction showcases the continued growth and development of Dubai in general and the DIFC in particular, under the strong leadership and effective support HH Sheikh Maktoum bin Mohammed Al Maktoum.”
Chief Financial Officer Rajesh Pareek said, “We have undertaken a long journey to access the market by obtaining a credit rating followed by the set-up of the Sukuk documentation. We are as such very pleased with the encouraging response received from the investor community. The robust international investor perception to the transaction has highlighted DIFC’s unique credit story and solid business model. This issuance was key for us to engage with the fixed income investor community as part of our efforts to reposition our credit.”
Dubai Islamic Bank, Emirates NBD Capital, Noor Bank and Standard Chartered Bank acted as joint lead managers on the issuance. The Regulation S only trust certificates were issued under standalone documentation and will be listed on the NASDAQ Dubai.