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Dar Al Arkan to raise $300m in sukuk sale



Saudi developer Dar Al Arkan is planning to raise around $300 million through its first global debt issue in more than three years, aiming to secure funding to capitalise on opportunities in Saudi real estate sector.

The company plans to raise a five-year Islamic bond and began marketing it to investors, ahead of pricing later this week, banks arranging the deal said in a statement.

Dar Al Arkan last tapped markets for a dollar sukuk in 2010, when it priced a $450 million deal at 10.75 per cent.

Since then, however, there has been a recovery in the sector, boosted by prospects for a new mortgage law in Saudi, as well as rising demand for regional debt, which should allow Dar Al Arkan to substantially lower its funding costs.

Market talk puts the size of the latest deal at around $300 million, a banking source said on condition of anonymity. Early price guidance for the deal was for a yield of 6.25 per cent, the statement added, with lead managers saying in a later update orders were in excess of $500 million.

Standard & Poor’s earlier this month raised Dar Al Arkan’s outlook to positive on its B rating, four notches below investment grade.

“Dar Al Arkan’s upcoming sukuk should receive adequate demand in the 6.25 per cent area,” said Gus Chehayeb, director of Middle East and Africa corporate research at investment firm Exotix in Dubai.

Yet Chehayeb cautioned that the pricing could have been higher as there was concern in the market that Dar Al Arkan would follow the issuance with a generous dividend - which Dar Al Arkan ruled out in a separate bourse filing.

Shares in Dar Al Arkan closed down 6.3 per cent after the dividend comment, having risen 14.4 per cent in the first two trading days this week.

Source: Gulf Today

(Posted on 21-05-2013) Read More