Business | Property
Sorouh to sell $1b in asset backed bonds
The United Arab Emirates' Sorouh Real Estate plans to sell $1 billion of asset backed securities that comply with Islamic law during the second quarter to help fund expansion, a company executive said.
- Reuters
- Published: 00:34 March 25, 2008
Abu Dhabi: The United Arab Emirates' Sorouh Real Estate plans to sell $1 billion of asset backed securities that comply with Islamic law during the second quarter to help fund expansion, a company executive said.
The bonds, like traditional Islamic bonds known as sukuk, are asset backed. But unlike sukuk, they allow buyers direct access to the underlying asset.
"It is going to be a unique sukuk, it will be an asset-backed securities (ABS) sukuk which will be launched in the second quarter," the executive, who declined to be named, said yesterday. He said the value of the issue would be $1 billion.
Sorouh Chief Executive Mounir Haidar said in February Dhabi's largest property developer by market value was close to finalising a $1 billion borrowing programme to finance expansion.
Haidar has said Sorouh's projects could triple to Dh120 billion ($32.68 billion) in the next five years.
Asset-backed bonds can fetch a higher credit rating than the issuer, especially when the bonds are based on strong underlying revenue-generating assets.
The arrangement also insulates the issuer from creditors should volatility hit the assets, and the bondholders are not exposed to the issuer's future actions. Citigroup and three Abu Dhabi-based banks are arranging the sale, the executive said.
The securitisation market had the potential to be worth $250 billion by 2010, Nasser Al Saidi, chief economist of the Dubai International Financial Centre, said in July.
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