Jafza in Advanced Talks to Refinance $2 Billion Sukuk

Jafza in Advanced Talks to Refinance $2 Billion Sukuk

Dubai's Jebel Ali Free Zone (JAFZA) is in advanced talks with financial institutions over a financing package to meet its $2 billion-equivalent Islamic bond, or sukuk, maturity in November, the company said in a statement on Monday

April 30, 2012 3:26 by kippreport

Dubai’s Jebel Ali Free Zone (JAFZA) is in advanced talks with financial institutions over a financing package to meet its $2 billion-equivalent Islamic bond, or sukuk, maturity in November, the company said in a statement on Monday. The state-linked industrial free zone, located on the outskirts of Dubai, will use the funding package solely for the redemption of its 7.5 billion dirhams ($2.04 billion) sukuk, the statement, which accompanied its 2011 results, said. “The board of directors is confident about JAFZA’s ability to refinance the sukuk,” Hisham Abdullah al-Shirawi, chairman of Economic Zones World (EZW), JAFZA’s parent and a unit of state conglomerate Dubai World, said. In March, Reuters reported the company was preparing a three-pronged approach to the refinancing, consisting of a syndicated loan, another sukuk issue, and partial cash repayment. Asset sales are also an option.

Along with a $1.25 billion sukuk issued by another state-owned entity, DIFC Investments, which matures in June, the upcoming JAFZA redemption is being closely tracked for the ability of Dubai Inc firms to meet their debt obligations.

Mohammed al-Shaibani, a top Dubai financial figure and head of its de facto sovereign wealth fund, reiterated on Monday that DIFC Investments will be solely responsible for repaying its sukuk. Market players have debated the likelihood of government support to strategic and non-strategic firms.

JAFZA’s sukuk was last bid at a cash price of about 96.65, to yield 9.304 percent, according to Thomson Reuters data, down from nearly 10 percent earlier this month but higher than this year’s lows of 8.2 percent in early March.

The company reported a net profit of 242 million dirhams in 2011, up from 140 million dirhams in the previous year, its financial statements showed. Last week, the government of Dubai successfully issued a $1.25 billion sukuk which attracted healthy demand due to increasing confidence that the emirate is committed to honouring its public debt obligations.

(Reporting by Rachna Uppal; Editing by David French)