Qatar: Deal of the Year
Issued out of its US$2 billion trust certificate issuance program, Ezdan Holding Group tapped the Islamic capital market for the first time with a successful US$500 million Wakalah Sukuk offering. Lead manager Emirates NBD Capital (ENBD) explains to NURUL ABD HALIM how Ezdan’s inaugural Sukuk deal is significant.
The RegS Sukuk facility was priced at 333bps over midswaps, attracting an orderbook of up to US$837 million, or around 1.67 times, from 71 investors. The Sukuk utilized the Wakalah and commodity Murabahah structure and carry a yield of 4.38% annually. The first issuance under Ezdan’s US$2 billion Sukuk program, proceeds from the Sukuk will be used for general financing purposes. The Qatari real estate developer previously tapped the Islamic syndicated financing market in 2014 and 2015 with a combined value of US$1 billion.
“The coverage amount has almost doubled than the offered [amount] in record time, which is an indication that Ezdan Holding Group is a trustworthy and reliable entity in the world of finance,” noted Sheikh Dr Khalid Thani Abdullah Al Thani, the chairman of Ezdan. The company is looking to utilize Sukuk as one of the means to boost its strategy in reinforcing its investments domestically and globally over the next few years.
Due to a limited supply of corporate Sukuk from the GCC region, Ezdan’s inaugural Sukuk witnessed a strong demand from investors the Middle East (68%), Europe (21%) and Asia (11%), marking the reopening of the corporate Sukuk market in Qatar since 2013.
Apart from being the group’s debut transaction in the international capital market, the paper is also the largest real estate capital market transaction from Qatar, offering investors the opportunity to get a hand on real estate-related Sukuk offerings in the Gulf.
Summary of terms & conditions |
|
Issuer |
|
Obligor |
|
Size of issue |
US$500 million |
Mode of issue |
Syndicated (bookrunning) public, Reg S issuance |
Purpose |
General financing purposes |
Tenor |
Five years |
Issuance price |
99.45% |
Profit rate |
4.38% |
Payment |
Semi-annually |
Currency |
US dollars |
Maturity date |
18th May 2021 |
Lead manager(s) and bookrunner(s) |
Emirates NBD Capital, Abu Dhabi Islamic Bank, Barwa Bank, HSBC, Mashreq, QInvest |
Governing law |
English and Qatari |
Legal advisor(s)/counsel(s) |
Allen & Overy — to the obligor Linklaters — to the banks |
Listing |
|
Underlying assets |
|
Rating |
Moody’s: ‘Ba1’ S&P: ‘BBB-‘ |
Shariah advisor(s) |
|
Structure |
|
Tradability |
Tradable |
Investor breakdown |
By region: Middle East: 68% Europe: 21% Asia: 11% By type: Banks: 47% Fund managers: 27% Private banks: 19% Other institutional investors: 7% |
The Sukuk issuance was not without challenges. “Given the issuer’s debut status in the bonds and Sukuk market, there was no outstanding curve to compare with the debut offering,” said ENBD, adding that there was competing supply in the market at the same time vying for the attention of fixed income investors.
Other hurdles faced by the issuer included the split ratings assigned to the Sukuk (‘Ba1’ by Moody’s and ‘BBB-’ by S&P) and investors’ limited knowledge on Qatar’s real estate market. ENBD, however, said that these challenges were addressed during the extensive roadshows held across Asia, London and the Middle East with Ezdan explaining its solid credit story directly to investors.
Ezdan Holding Group, a Doha-based public shareholding company listed on the Qatar Stock Exchange, is one of the Gulf region’s largest real estate developers by market capitalization, a major market player in the domestic real estate market and a pioneer provider of a wide spectrum of residential and commercial housing units.