Emaar hires banks to meet bond investors

DUBAI — Emaar Properties, the developer of the world’s tallest building, on Tuesday announced that the company has hired top three global banks to arrange fixed-income meetings ahead of a possible bond issue.

By Abdul Basit (with inputs from agencies)

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Published: Wed 19 Jan 2011, 11:52 PM

Last updated: Tue 7 Apr 2015, 4:26 AM

The UAE’s biggest developer by market value asked HSBC, Royal Bank of Scotland and Standard Chartered Bank to arrange meetings which start on January 21 and will take place in Asia, the Gulf region and Europe, the company said in a statement posted on the Dubai Financial Market (DFM).

The property developer’s share value increased by 0.3 per cent to Dh3.42 on Tuesday and total share transactions reached 9.5 million shares for the day.

Emaar raised $500 million from five-year convertible bonds paying interest of 7.5 per cent in September, using the money to pay contractors and convert some of its $1.4 billion of short- term loans into longer-term debt. The company is focusing on recurring income from shopping-mall leases and hotel revenue rather than new projects after property prices in Dubai fell by more than half since 2008 and transactions dried up.

“They are looking to extend maturity of their debt and they have about Dh3 billion to be refinanced,” Majed Azzam, an analyst at Alembic HC Securities said. “Bank lending remains tight so the credit markets appear more accessible following the success of their convertible issue.” Emaar is rated B1 by Moody’s Investors Service, its fourth-highest non-investment grade ranking, and two steps higher at BB by Standard & Poor’s. “Logically, the coupon on a straight bond should be higher than on the convertible,” Azzam said. “But since the issue of the convertible, Dubai credits have improved and depending on the appetite they might be able to price it lower.”

Emaar’s sale of convertible bonds in September received more than $3 billion in bids and more than 250 orders from investors globally.

The property market in the country suffered in the wake of the global financial crisis as developers overstretched themselves in the pursuit of ambitious projects. The sector’s woes are still far from over and last week Abu Dhabi-controlled Aldar Properties announced a $5.2 billion government support package. —abdulbasit@khaleejtimes.com

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