Sobha Realty lists $300m sukuk on Nasdaq Dubai

Islamic bond is the first of its kind to include a call feature

Published: Wed 19 Jul 2023, 7:18 PM

By
Issac John

Sobha Realty, one of the region’s largest real estate developers, announced on Wednesday the listing of a $300 million sukuk on Nasdaq Dubai.

The issuance introduced a new dimension to the GCC sub-investment grade sukuk market by becoming the first of its kind to include a call feature, the developer said in a statement. The sukuk, which has a tenor of five years, offers investors an annual profit rate of 8.75 per cent, which is payable semi-annually.

With the new listing, Dubai further reinforced its position as a leading hub for regional and international debt listings, reaching a total value of $117 billion.

To commemorate the successful listing, Ravi PNC Menon, co-chairman of Sobha Realty, and Hamed Ali, CEO of Nasdaq Dubai and Dubai Financial Market (DFM), rang the bell at the market-opening ceremony at Nasdaq Dubai.

Ali said the milestone debut sukuk listing of Sobha Realty on Nasdaq Dubai is a significant achievement as it not only underscored the robustness and attractiveness of the Dubai capital market but also highlighted the increasing demand for Islamic finance instruments in the region. “Nasdaq Dubai remains dedicated to fostering innovation and advancing the growth of the UAE financial market, and we are proud to offer a diverse range of investment products. We extend our wholehearted support to Sobha Realty and eagerly anticipate their prosperous journey in the region,” said Ali.

Menon said the successful listing of the sukuk on Nasdaq Dubai refelcted the strong investor confidence in Sobha Realty’s growth strategy and strong financial position. “We were successful in attracting a diverse pool of investors through our sukuk issuance, both domestically and internationally, which is a testament to our continued success and long-term vision. We hope to leverage this capital to shape our expansion strategies, contribute to the long-term development of the real estate sector, and create sustained value for our stakeholders.”

Through this listing, Sobha’s sukuk has paved the way for regional debut issuers by becoming the first corporate issuer from the region in a senior unsecured benchmark-sized format this year, said the statement.

Primary issuances of bonds and sukuk in the GCC amounted to $28.3 billion in the first three months of 2023 compared to $36.3 billion raised during the same period in 2022, a decline of 22.1 per cent year-on-year, Markaz said in its research report titled “GCC Bonds and Sukuk Market Survey for Q1-2023”.

According to Fitch Ratings, outstanding sukuk volumes exceeded $800 billion for the first time in 2Q23. However, issuance is expected to slow in 3Q23 coinciding with summer vacations in many countries, before picking up pace in 4Q23.

Sukuk issuance in core markets reached $49.1 billion in 2Q23, up 10 per cent quarter on quarter while bond issuance fell by 4.8 per cent. Fitch expects 3Q23 to be cooler for the global sukuk market before picking up pace in 4Q23.

“As expected, the first half of 2023 was a busy period for sukuk issuance on the back of issuers’ funding needs and diversification attempts as well as initiatives to develop the local debt capital markets,” said Bashar Al Natoor, global head of Islamic Finance, Fitch Ratings.