The Dubai government-owned carrier joins a list of regional issuers
seeking funding from international debt markets before higher US
interest rates push up borrowing costs. International bonds are
particularly popular as cheap oil limits local banks’ ability to
underwrite large debt sales or to extend loans.
Emirates, which has built its Dubai operations into a hub for
transcontinental traffic between the US, Europe and Asia, has been a
regular borrower in the aircraft-financing loan market. Another reason
the company is seeking a sukuk is that it wants to diversify its
funding, the people said, asking not to be identified because the talks
are private.
"Emirates always seeks diverse sources of funding, including bank
finance, operating leases, Islamic financing, sukuk and bonds," a
spokesperson for the airline said. "We are continually engaged in
discussions with various financial institutions. We will not offer
comment unless a deal is formally announced."
Record pace
Governments in the Gulf Arab oil-exporting countries borrowed from
international bond markets at a record pace in 2017 as they sought to
cover budget deficits worsened by low crude prices. Saudi Arabia led the
pack, raising $21.5bn through sukuk and other bonds, followed by Abu
Dhabi’s $10bn issue and Kuwait’s $8bn fundraising, data compiled by
Bloomberg show.
Companies and banks may join sovereigns in the race to secure funding
in 2018 as they face a debt wall of about $60bn of syndicated loans and
bonds falling due.
Emirates raised $913m through a sukuk issue with a 10-year lifespan
in 2015. The Islamic bonds were guaranteed by the UK’s export-finance
agency, with the proceeds funding the acquisition of four Airbus
A380-800s — the world’s largest passenger aircraft.
Bloomberg
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