DP World launches $1.2 bln sukuk issue to cover tender

Dubai-based ports operator DP World launched a seven-year $1.2 billion sukuk issue on Tuesday, a document from lead managers showed.

The issue, structured to be compliant with rules allowing investors in the United States to participate, will price at 237.5 basis points over midswaps, according to the document.

This is significantly inside the initial pricing guidance of between 262.5 bps and 275 bps over the same benchmark given earlier in the day, indicating strong investor demand. The transaction will be used to fund the part-repurchase of DP World’s $1.5 billion sukuk which is due to mature in 2017, for which preliminary results of a tender offer announced on Tuesday showed investor demand had significantly outstripped the firm’s original plan to buy back half of the paper.

After receiving requests to buy $1.11 billion of the 2017 sukuk, DP World said it would consider increasing the initial ceiling of up to $750 million to include all tendered offers, subject to the completion of the new financing. The new $1.2 billion sukuk would sufficiently cover this revised plan.

The sukuk is being arranged by Citi, Deutsche Bank, Dubai Islamic Bank, HSBC, Barclays, Emirates NBD, First Gulf Bank, JP Morgan, National Bank of Abu Dhabi and Societe Generale.