Dubai real estate developer Sobha Realty closed a Reg-S compliant USD 500 mn sukuk under its USD 1.5 bn trust certificate issuance program, it said in a press release. The paper will be listed on the London Stock Exchange (LSE) and Nasdaq Dubai. Bloomberg reported last month that proceeds from the debt issuance will be used to fund land acquisitions.

Strong demand: The offering, which matures in 2029, was 3x oversubscribed with total orders valued at USD 1.5 bn, allowing the issuer to tighten the effective yield to 8%, down from initial price thoughts of c. 8.4%. Some 61% has been allocated to local investors, while 39% was allocated to international investors. The offering is expected to achieve a Ba2/stable rating by Moody’s and BB/stable rating by S&P, the statement said.

Sobha’s parent company recently received a rating upgrade: Moody’s upgraded Sobha Realty’s parent company PNC Investments’ (PNC) to Ba2 with a stable outlook, up from a previous Ba3 rating, on the back of robust sales, improved credit metrics, strong construction activity, and a backlog of over AED 23 bn. The sukuk is expected to achieve a Ba2/stable rating from Moody’s and a BB/stable rating from S&P.

ADVISORS- Our friends at Mashreq are acting as lead managers and bookrunners on the transaction, along with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Arqaam Capital, Dubai Islamic Bank, Emirates NBD Capital, JP Morgan, Rakbank, Sharjah Islamic Bank, Standard Chartered and Warba Bank. Clifford Chance and Dentons acted as legal counsels, and Grant Thornton as financial auditor.

IN CONTEXT- Emirati real estate players are loading up on Islamic FCY debt. Just last month, Dubai-based luxury developer Omniyat closed its maiden USD 500 mn green sukuk issuance. Aldar Investment Properties also tapped global markets with a USD 500 mn 10-year green sukuk back in March, while Damac returned in February with its first benchmark issuance in a year and a half — a USD 750 mn 3.5-year sukuk.

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