Emirates picking eight banks to arrange US$1b sukuk: sources

[DUBAI] Emirates, the world's biggest airline by international traffic, has mandated eight banks including HSBC Holdings and Standard Chartered to manage a sale of Islamic bonds, according to two people with knowledge of the transaction.

The Dubai government-owned carrier also picked Citigroup, BNP Paribas, Emirates NBD PJSC, Dubai Islamic Bank PJSC, Abu Dhabi Islamic Bank PJSC and Noor Bank PJSC, said the people, asking not to be identified because the information is private. The issue is scheduled for the next few weeks and will aim to raise about US$1 billion, they said.

Emirates will join a list of regional issuers seeking funding from international bond markets before expected increases in US interest rates push up borrowing costs. Issuers from the six-nation Gulf Cooperation Council, which includes the two biggest Arab economies of Saudi Arabia and the United Arab Emirates, raised a record US$84.9 billion from bond sales last year as they sought to take advantage of low interest rates and sidestep tight liquidity in the local-loans market amid low oil prices.

"Emirates always seeks diverse sources of funding, including bank finance, operating leases, Islamic financing, sukuk and bonds," Emirates said in response to questions.

"We are continually engaged in discussions with various financial institutions. We will not offer comment unless a deal is formally announced as per financial market regulations."

Emirates, which has built its Dubai operations into a hub for transcontinental traffic between the US, Europe and Asia, typically raises financing each year from a combination of commercial loans, operating leases and export credit agency backed facilities. It last sold a bond in 2015, when it raised US$913 million from a 10-year sukuk, guaranteed by the UK's export-finance agency, to help pay for four Airbus A380-800s.

Emirates signed a deal last week for 36 additional Airbus SE A380 aircraft, with 20 firm orders and 16 options worth US$16 billion at list prices, handling the aircraft manufacturer the first orders for the model in more than two years.

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