JAFZA to raise US$1.85bn for redemption - source

Aims to raise $650m from new sukuk and $1.2bn from Islamic facility.
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By: Reuters

Dubai's Jebel Ali Free Zone (JAFZA) plans to raise US$1.85bn towards the redemption of its US$2bn Islamic bond this year by issuing another sukuk and obtaining an Islamic financing facility, a source familiar with the plan said on Tuesday.

The source, who declined to be named ahead of any official announcement, said JAFZA aimed to raise US$650m from the new sukuk and US$1.2bn from the Islamic facility.

The Islamic facility is expected to be a borrowing arrangement from banks, banking sources had said earlier. The rest of this year's sukuk redemption would be paid for with JAFZA's internal cash resources.

The state-owned company's AED7.5bn (US$2.04bn) sukuk is due in November, and bond holders voted last month to let JAFZA repay the debt early.

The JAFZA sukuk is one of the major corporate debt maturities in Dubai this year, and a smooth redemption would increase confidence that the emirate is bringing its debt problems under control.

Moody's Investors Service said in a report on Monday that the plan to raise new financing and repay the sukuk "would remove the existing refinancing risk that currently constrains JAFZA's ratings and thereby provide the company with a sustainable capital structure and a materially improved debt maturity profile".

Lead managers said last week that JAFZA had picked seven banks to arrange its new sukuk issue.

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