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CASE STUDY: Ezdan Holding Issues Debut US$500mn Sukuk in Quest to Diversify Funding

Ezdan’s debut US$500mn 5-year fixed rate trust certificates helped the company diversify its sources of funding, and created a broader platform from which Qatar’s leading real estate developer, owner and operator can grow its business in the future.

Jan 31, 2017 // 11:59AM

Deal At A Glance

Deal Type: Sukuk, Fixed Rate Trust Certificates

Deal Structure: RegS

Location: Qatar

Borrower: Ezdan Sukuk Company Limited

Obligor: Ezdan Holding Group

Listing: Irish Stock Exchange

Governing Law: English law and Qatari Law

Global Coordinators and Bookrunners: HSBC, Mashreq Bank

Bookrunners: Abu Dhabi Islamic Bank, Barwa Bank, Emirates NBD, Qatar First Bank, Qinvest

Legal Adviser to Obligor: Allen & Overy

Legal Adviser to Issuer: Maples

Legal Advisers to JLMs: Al Tamimi & Co, Linklaters

Size: US$500mn

Tenor: 5 years

Coupon/Margin: 4.375% per annum payable semi-annually in arrear

Reoffer Price/Yield: 99.446% / 4.50%

Spread: MS+333bp

Date of Issue: May 2016

Maturity Date: May 2021

Use of Proceeds: To refinance existing debt

Background

Ezdan’s US$500mn issuance is not only the company’s first sukuk, but also its debut foray into international credit markets.

Ezdan is also the first Qatari private sector corporate to tap the debt capital markets through a public issuance in 2016 and the first corporate to issue a sukuk out of the MENA region in 2016.

The transaction also marks the first milestone in Ezdan’s US$2bn 2-year sukuk programme.

Transaction Breakdown

A formal announcement for a roadshow for Ezdan’s sukuk was made in late April, with investor meetings scheduled in Hong Kong, Singapore, the UAE and London.

A well-diversified base of clients were covered during the investor roadshow, which consisted of a combination of one-on-one and group meetings, as well as Investors’ Presentations.

Following the completion of the roadshow, Ezdan announced a deal with initial pricing thoughts in the low to mid 300bp area over midswaps for a US dollar benchmark- sized 5-year transaction set to mature on May 18 2021.

The orderbook grew steadily overnight to reach around US$700mn from global accounts. The price guidance was released in the 4.500% area, and the transaction was subsequently priced at 4.375% on May 11.

The sukuk was issued on May 18, and eventually generated a total orderbook of around US$800mn, translating into  an oversubscription of 1.6x from 71 investors from various geographies including MENA, Europe and Asia, demonstrating strong investor appetite for debut issuers with robust credit profiles despite the volatile market environment.

Ezdan Holding Group is rated Ba1 stable by Moody’s and BBB- stable by S&P Global Ratings.  The issue itself was rated Ba1/BBB-.

About 68% of the itrust certificates went to investors based in the Middle East, while European investors accounted for 21% and Asian investors constituted 11% of the demand for the sukuk.

Middle East Islamic Finance CEEMEA CEE & Turkey

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