Emirates Repays $550 Million Bond; Looks at Islamic Debt

Emirates, the world’s largest airline by international traffic, will look at Islamic debt for future financing after paying a $550 million sukuk.

“With the Eurozone debt crisis ongoing it’s likely that Islamic financing, with its large pool of liquidity, will play an increasingly important role for us moving forward,” Chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement today. “The repayment of our first-ever sukuk bond is part of Emirates’ varied financing strategy and reflects our robust financial position.”

Emirates is building the world’s largest fleet of Airbus superjumbo jets to establish Dubai as a long-haul travel hub and win passengers from Air France-KLM (AF) and Deutsche Lufthansa AG. The Dubai-based airline is one of the biggest buyers of Airbus SAS A380 superjumbos and the Boeing 777s, and in November signed a deal valued at $18 billion with Boeing Co. (BA)

The carrier repaid the seven-year Islamic bond, listed on the Luxembourg Stock Exchange, in full on its maturity date today. The floating bond last traded at 99.36 cents on the dollar on June 15, according to Bloomberg data. The yield on the airline’s 5.125 percent bond maturing June 2016 fell 16 basis points last week to 4.46 percent.

Earlier this year, Emirates raised 1.9 billion dirhams ($517 million) from an Islamic facility for the purchase of three aircraft. The 12-year loan will finance the purchase of planes including Boeing’s 777-300ERs and Airbus’s A380.

To contact the reporter on this story: Tamara Walid in Abu Dhabi at twalid@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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