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Emirates, the world’s biggest airline by international traffic, has mandated eight banks including HSBC Holdings Plc and Standard Chartered Plc to manage a sale of Islamic bonds, according to two people with knowledge of the transaction.
The Dubai government-owned carrier also picked Citigroup Inc., BNP Paribas SA, Emirates NBD PJSC, Dubai Islamic Bank PJSC, Abu Dhabi Islamic Bank PJSC and Noor Bank PJSC, said the people, asking not to be identified because the information is private. The issue is scheduled for the next few weeks and will aim to raise about $1 billion, they said.
Emirates will join a list of regional issuers seeking funding from international bond markets before expected increases in U.S. interest rates push up borrowing costs. Issuers from the six-nation Gulf Cooperation Council, which includes the two biggest Arab economies of Saudi Arabia and the United Arab Emirates, raised a record $84.9 billion from bond sales last year as they sought to take advantage of low interest rates and sidestep tight liquidity in the local-loans market amid low oil prices.
“Emirates always seeks diverse sources of funding, including bank finance, operating leases, Islamic financing, sukuk and bonds," Emirates said in an emailed response to questions. “We are continually engaged in discussions with various financial institutions. We will not offer comment unless a deal is formally announced as per financial market regulations.”
Emirates, which has built its Dubai operations into a hub for transcontinental traffic between the U.S., Europe and Asia, typically raises financing each year from a combination of commercial loans, operating leases and export credit agency backed facilities. It last sold a bond in 2015, when it raised $913 million from a 10-year sukuk, guaranteed by the U.K.’s export-finance agency, to help pay for four Airbus A380-800s.
Emirates signed a deal last week for 36 additional Airbus SE A380 aircraft, with 20 firm orders and 16 options worth $16 billion at list prices, handling the aircraft manufacturer the first orders for the model in more than two years.
The Islamic Corporation for the Development of the Private Sector (ICD, Aa3 stable) benefits from a robust capital position and strong liquidity, although its weak asset quality remains a challenge,
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