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Abu Dhabi, UAEMonday 23 July 2018

Dubai Aerospace Enterprise board approves $300m bond repurchase

Aircraft lessor said earlier repurchased $43m of bonds maturing in 2024

A DAE ATR72-600 aircraft. The Dubai state-backed lessor said it has approved a $300m bond repurchase programme. Courtesy Dubai Aerospace Enterprise
A DAE ATR72-600 aircraft. The Dubai state-backed lessor said it has approved a $300m bond repurchase programme. Courtesy Dubai Aerospace Enterprise

Dubai Aerospace Enterprise (DAE), the Middle East’s biggest aircraft lessor, said its board of directors and shareholders approved a bond repurchase programme of up to $300m (Dh1.1bn), as the company looks to further strengthen its financial position in order to expand its fleet.

“Our bonds, in our opinion, are currently trading at prices and spreads not consistent with the company’s market position and strong credit profile,” said DAE managing director Khalifa Al Daboos, in a statement to media on Monday.

“The strength of our balance sheet and our projected cash position allow us to repurchase our bonds at a considerable discount and improve the gross leverage position of the company.”

DAE has $2.3bn in senior bonds in US capital markets, which it raised to fund its 2017 acquisition of Dublin-based aircraft lessor Awas. The company presently has a $14 billion fleet.

The UAE identified aircraft leasing as a high-growth sector that feeds into the country’s plans to expand its aviation sector beyond the airline industry, with ambitions to become an integrated hub for the aviation, aerospace manufacturing and support services industries.

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Dubai state-owned DAE is seeking to grow its fleet further following the Awas deal which swelled its portfolio to almost 400 planes. It is in talks with Airbus and Boeing for an order of 400 narrow-body jets and has said it may acquire another lessor if a deal with the plane makers does not materialise.

Under the programme approved on Monday, $300m of repurchases will be conducted through transactions on the open market, DAE said. Prior to this approval, the state-backed lessor had already repurchased $43m of its bonds due to mature in 2024, it said.

In May, DAE signed a deal for an unsecured revolving $480m credit facility with local and regional banks Al Ahli Bank of Kuwait, First Abu Dhabi Bank and Noor Bank, as part of its strategy to diversify its sources of funding. The four-year deal can be extended to up to $800m and has both Islamic and conventional tranches, DAE said in statement at the time.

The lessor is also considering a $500m sukuk issuance and could tap the market either later this year or in 2019, depending on investor appetite, DAE chief executive Firoz Tarapore said in April.