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DP World to hire banks for 10-year debut green sukuk

DP World has announced a critical expansion plan that will take its total gross capacity to 93.6 million TEUs Wam
DP World’s net profit fell 18 percent year on year to $1.5 billion last year due to higher finance costs

DP World intends to issue its first 10-year US dollar-denominated benchmark-sized green sukuk, as the ports operator expands its global reach.

The Dubai-based company held investor meetings on September 4 and 5, Reuters reported, citing a bank document.

Citi, Deutsche Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, J.P. Morgan and Standard Chartered Bank have been mandated as bookrunners. HSBC is acting as the ESG structurer.

Issuance of green sukuk by DP World Crescent Limited might follow under its $5 billion trust certificate issuance programme, subject to market conditions.

Sukuk are Sharia compliant bonds that were developed as an alternative to conventional bonds which are not considered permissible by many Muslims as they pay interest, and also may finance businesses involved in activities not allowed under Sharia law.

In the past few months, DP World has announced investments in several countries such as India, Turkey, Indonesia, Canada, Romania, among others.

DP World – which manages 9 percent of the world’s handling capacity, putting it among the top five global port operators – last month announced a critical expansion plan that will take its total gross capacity to 93.6 million 20-foot equivalent units (TEUs). 

Demand appears strong in the UAE for Sharia-compliant products, Fitch Ratings said in a report.

The government received bids of AED6 billion for its latest auction of T-sukuk, financial instruments that are Sharia compliant and issued by the federal government in dirhams. The oversubscription rate was 5.5 times.

Debt sales in the region restarted in July after a month-long lull that began after the Commercial Bank of Dubai sold green bonds, with Dubai developer Sobha Realty opening the way with a $300 million sukuk offering.

Two Abu Dhabi banks then followed, raising a total of $1.25 billion from the sale of conventional and Islamic bonds.

Global Islamic finance assets are estimated to have crossed $3.3 trillion in the first half of 2023, according to Fitch.

If impediments are addressed, Fitch expects “strong long-term growth”, although this will likely be concentrated in core markets.

More than 70 percent of global Islamic banking assets are concentrated in the GCC countries, Malaysia, Bangladesh, Jordan and Pakistan. Domestic market shares range from 15 to 85 percent.

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