Dubai's DIFCI raises $1bn loan to fully repay sukuk

DIFC Investments (DIFCI), the investment arm of the company running Dubai’s financial free zone, said today it has secured a $1.035 billion syndicated facility to contribute towards full repayment of its $1.25bn Sukuk maturing next week on June 13, 2012. “This is a landmark transaction in the history of the DIFC which further evidences the commitment of Dubai to meet its obligations in a timely manner,” the DIFCI said in a statement on the Nasdaq Dubai bourse website. The investment firm elaborated that the transaction is a dual tranche Islamic facility and includes both commodity murabaha and ijarah tranches. The new five-year loan is priced at 380 basis points over EIBOR/Libor and is principally secured on DIFCI’s Grade A property portfolio, which is regarded as the region’s premier financial district, it added in the statement. The mandated lead arrangers and bookrunners of the facility are Emirates NBD, Standard Chartered Bank, Dubai Islamic Bank and Noor Islamic Bank. Moelis & Co acted as financial advisor to DIFCI. Dubai’s government-owned and quasi-sovereign entities have been chiseling away at its debt pile, which has resulted in a sharp drop in yields on Dubai government’s dollar-denominated bonds, which are now at record lows. The yield on the 7.75 per cent $750 million (Dh2.7 billion) notes due 2020 declined to 6.26 per cent in Dubai yesterday, near the lowest levels since they were sold in September 2010, according to data compiled by Zawya.com.