Dubai-based developer Binghatti to debut US Dollar bond offering

Image credit: Binghatti

UAE-based real estate developer Binghatti Holding has hired banks to arrange investor meetings for its planned 3-year debut US Dollar bond or sukuk, an arranging bank’s document showed on Tuesday.

The property developer has picked Dubai Islamic Bank, Emirates NBD Capital and HSBC as joint global coordinators and joint book-runners for the debt transaction, according to a report by Reuters.

Investor meetings are scheduled to start from February 20 and will be followed by a benchmark-sized US dollar-denominated senior unsecured sukuk offering, subject to market conditions, the document added.

A report quoting a release by the developer pegged the debut sukuk offering at $500m. “This initiative further solidifies the company’s commitment to exploring innovative avenues for capital raising while adhering to the principles of Sharia-compliant finance,” the company said.

Read: Binghatti, Mercedes-Benz to build luxury residential tower in Dubai

The bond is expected to receive a positive reception with Dubai’s real estate market shattering transaction records. Credit ratings agency, Fitch Ratings assigned Binghatti’s upcoming sukuk a ‘B+’.

The agency explained that a key driver of the rating is, “Derived from Binghatti’s Long-Term IDR. This reflects Fitch’s view that a default of the senior unsecured obligations would reflect a default of Binghatti, in accordance with Fitch’s rating definitions. Binghatti’s senior unsecured rating is also expected and will be assigned a final rating upon the issue of the sukuk.”

The developer is following a trend set by other real estate groups in the UAE such as Sobha Realty, FIVE Holdings, and DAMAC who recently entered the bond market with similarly-sized offerings.

Additionally, sukuks dominated issuance in Gulf Cooperation Council member nations last year, taking just over half of the total $93bn. HSBC expects bond debuts to push overall bond sales above $100bn this year, reported Bloomberg.

Read: Sobha Realty raises $300m with debut sukuk

Binghatti developing world’s tallest residential tower

The real estate firm is an Emirati-business group with a range of offerings in Dubai. Founded in 2008 by Emirati entrepreneur Hussain Binghatti, it recently announced the launch of its Mercedes-Benz branded residential tower in Dubai.

The developer has also partnered with jewellery firm Jacob & Co for its Burj Binghatti Jacob & Co Residences, which it says will be the world’s tallest residential development at 116 floors.

It aims to break the current record for residential buildings held by New York’s Central Park Tower.