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Sharjah developer Arada raises $100m in tap of existing sukuk

Arada Developments
Arada will develop a plan to obtain green building certificates and publish a sustainable finance framework within two years

Sharjah-based Arada Developments raised $100 million in Islamic bonds on Thursday in a reopening of a transaction that raised $350m in May, a bank document showed.

The sukuk tap was priced at 99 cents on the dollar, yielding investors 8.386 percent, the document showed. The order book size was not disclosed.

The sukuk issued in May was sold at a profit rate of 8.125 percent and were trading to yield 8.49 percent at 1128 GMT, data from Refinitiv’s Tradeweb showed.

The reopening deal comes as issuers in the Gulf, where bond sales have plummeted this year amid enduring volatility and rising rates, have pounced on windows of opportunity to issue in choppy markets. Saudi Arabia, for example, raised $5 billion on Tuesday.

Arada, in an investor presentation seen by Reuters for the tap, touted ‘proven support from government and regulatory authorities’.

That included a government guarantee for a loan of up to $436 million, financing flexibility and ‘access to premium land allotment’, the presentation said.

The company, which plans to launch its first project outside Sharjah in Dubai next year, made a AED 124m ($33.76m) profit last year, according to a prospectus seen by Reuters. That was down 44.5 percent from 2020, having already fallen 37.1 percent from 2019.

EBITDA was $45m in the first half of 2022, up from $23m a year earlier, the investor presentation said.

Arada said it would develop an environmental, social and governance (ESG) strategy within the next year, the presentation said.

Within two years, Arada will develop a plan to obtain green building certificates and publish a sustainable finance framework. It ‘will achieve carbon neutrality in the development process’ within 10 years, the presentation said.

Emirates NBD Capital and Standard Chartered were joint global coordinators on the sukuk tap. ADCB, Dubai Islamic Bank, Emirates NBD Capital, HSBC, Kamco Investment Company, Mashreq, Sharjah Islamic Bank, Standard Chartered and Warba Bank were joint lead managers and bookrunners.