DP World began the tender for the sukuk with the aim of repurchasing US$750mn in outstanding certificates. The issuance was designed reduce risk in meeting its refinancing obligations in 2017, and reduce its overall refinancing costs.
Investor meetings began in Dubai on May 18, followed by London on May 19 and 20. Although the majority of the interest in the sukuk originated from the Middle East, there was also significant interest from international accounts, especially from Hong Kong, Singapore, London and Geneva.
Initial price thoughts for the 7-year sukuk were in the area of MS+262.5bp to MS+275bp.
As the orderbook grew from US$1.7bn to US$2.3bn pricing was tightened over the IPTs by 37.5bp to within MS+237.5bp to MS+250bp.
The high demand for the bond resulted in an orderbook that was 1.75x oversubscribed, and allowed pricing to be secured at the tighter end of expectations, MS+237.5bp.
“The strong demand for our new sukuk is a clear sign of support for the economic fundamentals of Dubai and the UAE, and a positive outlook on DP World’s growth trajectory and credit ratings,” said Sultan Ahmed Bin Sulayem, CEO and Chairman of DP World Group. The company and transaction is rated BBB- and Baa3 by Fitch and Moody’s respectively.
A significant amount of support came from the UAE, with 47% of the demand for DP World’s sukuk originating from the country. 17% came from other Middle Eastern countries and North Africa, whilst investors in the UK and Switzerland were the next largest purchasers of the bond with 15% and 7%, respectively. About 6% was place with accounts that originated from elsewhere in Europe, whilst investors in Asia and the US contributed 5% and 3% respectively.
By investor type, 54% were banks and private banks, fund managers accounted for 29%, 11% originated from pension funds, insurance companies and supranational organisations, and 6% came from other investors.