EMIRATES BOND ISSUE DOUBLED TO DH 1.5 BILLION

The first-ever Emirates Bond Issue has been over-subscribed by more than two and a half times, it was announced by HH Sheikh Ahmed bin Saeed Al-Maktoum, the chairman of Emirates. He confirmed that the airline will double the initial launch amount for the bond of Dhs750 million and close the issue for an amount of Dh one and a half billion(US$408.3 million).

The Emirates Bond issue was arranged by HSBC Financial Services (Middle East) Limited and the National Bank of Abu Dhabi. It was lead managed and underwritten by HSBC Bank Middle East, National Bank of Abu Dhabi, Emirates Bank Group and the National Bank of Dubai. This management group has been expanded to include ABN Amro, Barclays Capital, Citibank N.A., Credit Agricole Indosuez, Lloyds TSB and Standard Chartered Bank as Co-Managers.

The Emirates Bond was launched on 13th June to institutional and professional investors with a minimum subscription level of AED5m. It is the largest dirham-denominated bond to be issued to date, and the first to be listed on the Dubai Financial Market (DFM). Emirates is the first corporation in the UAE to raise finance directly from the investors in this manner.

Sheikh Ahmed said: “We are delighted that the Emirates Bond Issue has had such a strong response from the UAE financial community and it is a big vote of confidence in Emirates. The bond represents an important diversification of funding for Emirates and the proceeds from the bond issue will be used for various corporate financial purposes. The bond marks an historic development for the financial markets in the UAE and we are grateful to the investors and the financial institutions for their continued support and confidence in Emirates”.

The bond is in the form of a Floating Rate Note (FRN) and will have a maturity of five years. It will pay interest semi-annually at a rate of 70 basis points over six-month EBOR (United Emirates InterBank Offered Rate), which will be reset every six months.

Dealings are expected to commence on the DFM on 11 July. The issue will be cleared and settled through (as well as listed on) the DFM. In the secondary market, investors will be able to trade the FRNs in multiples of Dh100,000 (US$27,400) via exchange brokers.

Legal Advisers for the Issuer were Allen & Overy and for the Lead Managers Clifford Chance and Al Tamimi & Co. Auditors for the issue are PricewaterhouseCoopers.

David Moleshead, Director Investment Banking, HSBC Financial Services (Middle East) Limited, said “As an institution HSBC has been involved in arranging many debut issues around the globe. To be associated with the Emirates Bond is particularly pleasing as we believe that the success of this flagship transaction will lead the way for many others and will help the UAE to become an attractive market for the raising of debt”.

Terence D. Allen, Head of Treasury & Investment Banking Division, National Bank of Abu Dhabi, said “Yet another landmark in the development of the UAE as the financial centre of the Middle East has been achieved. The overwhelming support of the local business community for a well-structured issue such as Emirates bond, establishes the strength of the financial resources of the UAE