x Abu Dhabi, UAEFriday 21 July 2017

Dar Al Arkan plans dollar-denominated Islamic bonds

Dar Al Arkan, a Saudi developer, plans to sell dollar-denominated Islamic bonds to fund projects and said the issue would be the first of a series of sales over the next 12 months.

Dar Al Arkan, Saudi Arabia's second-biggest property company, plans to sell dollar-denominated Islamic bonds to fund projects and said the issue would be the first of a series of sales over the next 12 months.

The Riyadh-based company appointed Bank Al Khair, Goldman Sachs, Deutsche Bank, Emirates NBD Capital, Masraf Al Rayan and Qinvest to manage the issue, it said in a statement to the Saudi bourse on Monday. Dar Al Arkan plans to sell benchmark-sized, five-year notes that may be priced to yield about 6.25 per cent as early as this week, said three people familiar with the deal, asking not to be identified because the information is not yet public. Benchmark-sized issues usually raise at least US$500 million.

Standard & Poor's earlier this month revised Dar Al Arkan's outlook to positive from stable and affirmed its B+ rating, the fourth-highest non-investment grade score. It cited the company's "resilient" operating performance, "favourable market conditions and an attractive land bank" for the change.

Issuers in the six-nation Gulf Cooperation Council, which includes Saudi Arabia and the United Arab Emirates, have raised $9.5 billion from Islamic bond sales so far this year as they take advantage of low yields, according to data compiled by Bloomberg. State-owned Saudi Electricity Company raised $2bn from the sale of two Islamic bonds in March, including the world's first 30-year dollar-denominated sukuk.

Dar Al Arkan reported a 19 per cent drop in first-quarter profit in April to 237.6m Saudi riyals, missing analyst estimates. The company earns "high margins" from land sales and has proved its ability "to monetize developed and undeveloped land when required over the past two years," S&P said in its ratings report.

Dar Al Arkan repaid a 3.75bn riyal Islamic bond in July last year. The company's shares have risen 14 per cent this year compared to a 7.7 per cent rise in the exchange's benchmark index.

 

* Bloomberg News