Emaar Raises $500 Million From Sale of Islamic Bonds

Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai, paid a lower profit rate than last year when it raised $500 million from the sale of Islamic bonds.

The Dubai-based developer offered a profit rate of 6.4 percent on the seven-year Shariah-compliant notes, a person familiar with the matter said, declining to be identified because the details are private. Emaar raised $500 million from the sale of five-year Islamic notes at a profit rate of 8.5 percent last year. The yield on the sukuk due August 2016 fell 227 basis points this year to 5.93 percent today.

“It’s not offering much more than its existing sukuk, but investors are chasing yields, so the profit rate is attractive,” Thomas Christie, a fixed-income sales trader at Rasmala Investment Bank Ltd. in Dubai, said by telephone today. “Investors are comfortable with this credit, they know its story and they’re comfortable with the risks.”

Demand for sukuk, or debt that complies with Islamic laws, has driven sales in the Persian Gulf to $16.9 billion this year from $3.3 billion in the same period last year, data compiled by Bloomberg show. Qatar, the world’s biggest exporter of liquefied natural gas raised $4 billion from the sale of a two-part sukuk yesterday, paying less than any other sovereign issuing Islamic bonds.

Emaar, owner of the Middle East’s largest mall, raised 3.6 billion dirhams ($980 million) in financing backed by the mall in December. Its first-quarter profit jumped 44 percent from a year earlier as the company increasingly relies on income from hotels and retail after revenue from residential sales declined.

Emaar may report second-quarter profit more than doubled to 551 million dirhams, according to the mean estimate of four analysts on Bloomberg. The shares rose 1.3 percent to 3.08 dirhams at 11:53 a.m. in Dubai, compared with a 0.5 percent increase in the Dubai Financial Market General Index .

HSBC Holdings Plc, Standard Chartered Plc, Emirates NBD Capital Ltd., Noor Islamic Bank PJSC, Dubai Islamic Bank PJSC, Al Hilal Bank PJSC and Barwa Bank arranged the sale.

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