Emaar picks banks for potential sukuk

Emaar Properties, builder of the world's tallest tower Burj Khalifa, has picked banks to arrange investor meetings in London ahead of a possible new Islamic bond, or sukuk, issue.

The company, the Gulf's largest listed developer by market value, has mandated no fewer than seven regional and international banks for the meetings which take place on July 11, and only in London.

A sukuk issue under the company's $2 billion sukuk programme may follow, subject to market conditions, arranging banks said on Tuesday.

The Islamic debt market has been resilient during the latest phase of the euro zone crisis and most regional deals so far this year have been in the form of sukuk.

Emaar, which saw sales of apartments plunge 85 per cent last year, is gradually shifting its focus from the bleak Dubai property market towards the more profitable hospitality and retail sectors.

It owns the Dubai Mall, billed as the world's largest shopping mall, and operates the Armani-branded hotels. Last year, Emaar used Dubai Mall as collateral to secure a $1 billion lending to help refinance upcoming debt.

Emaar plans to focus on boosting revenues from its global operations and enhancing profit from recurring revenues, its chief executive Mohammed Alabbar said earlier this year.

Emaar's previous sukuk issue was a $500 million sale in February 2011 which carried a profit rate of 8.5 per cent under the programme.

The sukuk has rallied significantly in recent weeks, and was bid well above par at 109.5 cents to the dollar on Tuesday, to yield 5.8 per cent, according to Thomson Reuters data.

Emaar has picked Standard Chartered, HSBC Holdings, Abu Dhabi's Al Hilal Bank, Qatar's Barwa Bank, Emirates NBD, Dubai Islamic Bank and Noor Islamic Bank for the deal.

Emaar shares closed 0.3 per cent lower on the Dubai bourse prior to the sukuk announcement.