Dubai’s Tamweel sets up $1B bond programme

Dubai’s Tamweel sets up $1B bond programme

Islamic mortgage lender Tamweel, badly hit by the global financial crisis and the region's property bust, has set up a $1 billion bond programme, according to a base prospectus.

December 6, 2011 10:21 by Reuters

Tamweel will complete investor meetings in London on Monday, along with its parent company Dubai Islamic Bank, after which it may issue an Islamic bond, or sukuk, guaranteed by DIB.

Standard Chartered, Citi and DIB itself are the arrangers and dealers on the programme, according to the prospectus, which is dated Nov. 30 and obtained by Reuters.

Bond investors would have demanded a high premium on Tamweel bonds, without a guarantee from DIB. The Islamic lender ran into trouble when Dubai’s real estate sector collapsed in 2008 and its shares were halted for more than two years, only resuming trade last May.

Last year, DIB raised its stake in Tamweel to 57.33 percent in 2010, effectively rendering the mortgage lender a subsidiary of the bank and raising investor confidence in Tamweel.

Tamweel’s acting chief executive said in September it hoped to raise between $300 million to $500 million from a sukuk in the fourth quarter.

Tamweel was at one point expected to merge with rival Amlak . Amlak shares remain suspended, pending a decision by the government on its future.

Tamweel shares ended 1.4 percent lower on Monday. (Reporting by Rachna Uppal; Editing by Amran Abocar)