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GE Capital Shrugs Off Market Blues

Bruce Stanley / 11 December 2009

DUBAI — GE Capital has listed a $500 million sukuk on NASDAQ Dubai, the first such listing by a major US company and a vote of confidence in Dubai as a regional financial centre, executives said on Thursday.

GE Capital, the finance arm of Connecticut-based General Electric Company, sold the sukuk, or Islamic bond, to investors in the Middle East, Asia and Europe on November 27.

More than 60 per cent of the investors in the sukuk are based in the Middle East, and GE Capital believes that it can serve them better and stimulate trading in the sukuk by having it listed in Dubai, Aris Kekedjian, president and chief executive oficer of GE Capital Middle East & Africa Ltd., told Khaleej Times.

GE Capital listed its $500 million sukuk first in London on the London Stock Exchange and subsequently in Dubai and on the Bursa Malaysia in the Malaysian capital Kuala Lumpur. Some 30 per cent of the sukuk’s investors are in Asia, with the remaining 10 per cent in Europe, Kekedjian said.

“We continually strive to diversify our funding base. The sukuk platform helps complement and solidify GE’s growing presence in the region and allows us to attract incremental liquidity from Islamic investors. We are proud to announce our secondary listing on the NASDAQ Dubai and look to continue supporting the region in our ongoing efforts,” he said separately in a statement.

GE Capital was undeterred in its plans for the listing by the recent negative international response to Dubai World’s request for a delay in repaying $26 biilion in debts, Kekedjian told Khaleej Times.

“The market is not a problem. You have an issue today of a particular borrower,” he said. “... Listing here, frankly, doesn’t hurt us in any way. In fact, it helps us serve the needs of our investors... At the end of the day, we are committed to the market here.”

While GE Capital has no immediate plans for additional sukuk listings on Nasdaq Dubai, the company wants to expand its financing business in this region over the long term, Kekedjian said.

“We don’t typically issue debt once in any market... Our intent is to build on this issuance over time and be more of a regular issuer.”

NASDAQ Dubai now has 22 listed sukuk worth a nominal $17.2 billion. Other issuers of sukuk listed on the exchange are based in Bahrain, Kuwait, Saudi Arabia and Malaysia, as well as the UAE.

GE Capital’s five-year, fixed-rate dollar-denominated sukuk was issued through GE Capital Sukuk Ltd, a subsidiary of GE Capital. The assets underlying the sukuk are interests in a portfolio of aircraft and rental payments from the lease of such aircraft.

“The listing of this Sukuk by one of the most prominent companies in the world is an important step in the growth of NASDAQ Dubai as a centre of the global Islamic finance industry,” NASDAQ Dubai Chief Executive Officer Jeff Singer said in the statement.

General Electric has done business in the Middle East since the 1930s.


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