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Aldar issues $1 billion hybrid notes in landmark transaction

Issuance oversubscribed by 3.8 times with total orders exceeding $4.9 billion

Published: Thu 9 Jan 2025, 5:53 PM

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Aldar Properties has successfully priced its inaugural $1 billion hybrid capital issuance, attracting robust demand from a wide range of regional and international investors.

The issuance by Aldar at PJSC level represents the largest conventional hybrid in the Middle East. The transaction also achieved the highest rating, and the tightest credit spread at issuance for a corporate hybrid in the Central & Eastern Europe, Middle East and Africa (CEEMEA) region.

“Proceeds will support the continuation of Aldar’s transformational growth plan and its strategic priorities, including landbank replenishment and expansion, develop to hold portfolio, and acquisitions,” a company statement said.

Underscoring strong investor confidence in Aldar’s financial strength, strategic direction and potential for growth and value creation, the issuance was oversubscribed by 3.8 times. Total orders exceeded $4.9 billion from a wide range of institutional investors across diverse geographies. The final allocation comprises investors from the Middle East and North Africa (41 per cent) the United Kingdom (38 per cent), Europe (9 per cent), North America (8 per cent) and Asia (4 per cent).

Faisal Falaknaz, group chief financial and sustainability officer at Aldar, said: “The strong appetite for this issuance from a broad base of international institutional investors is a statement of confidence in Aldar’s vision and strategic direction. The company has carved a credible and proven track record of delivering measured and sustainable growth, and this landmark hybrid issuance supports the continued execution against our growth ambitions by further optimising our capital structure, setting firm foundations for Aldar to pursue a strategy to deliver significant value creation for all our stakeholders in the coming years.”

With characteristics of debt and equity, the unsecured, subordinated 30.25-year notes provide investors with an initial yield of 6.625 per cent with a non-call period extending to 7.25 years. The coupon payments, which will be distributed semi-annually, may be deferred for up to five years and are both cumulative and compounding, providing additional flexibility to Aldar’s capital structure.

In January 2025, Moody’s reaffirmed Aldar’s Baa2 credit rating with a stable outlook and assigned a standalone credit rating of Baa3 to the hybrid notes. This rating reflects Aldar’s robust financial position, strong standing in the market, and the innovative structure of the issuance, which for ratings purposes is treated as equity and debt in equal measure. However, as a debt instrument, the issuance is both non-dilutive and accretive for Aldar equity investors, with proceeds used to pay down senior debt to enhance Aldar’s overall credit profile while preserving debt capacity to support its upcoming growth initiatives and pipeline.

Marketed under Regulation S, the issuance was globally led and coordinated by Citi with Abu Dhabi Commercial Bank, Bank of China, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, Intesa Sanpaolo, J.P. Morgan, Mashreq, National Bank of Ras Al Khaimah, and Standard Chartered acting as joint lead bookrunners.



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