DP World, the Dubai-based global port operator and logistics group, launched its latest Sukuk offering on 24 June 2020 – a U.S.$1.5 billion Reset Subordinated Perpetual Certificates issuance.
The Sukuk Mudaraba was issued on 1 July 2020 by DP World Salaam, incorporated in the Cayman Islands, in its capacity as issuer and trustee on behalf of Obligor DP World PLC, which in turn is owned by Dubai World. Citigroup Global Markets, Deutsche Bank AG (London Branch) and J.P. Morgan Securities acted as global coordinators to the transaction.
DP World, rated Baa3 by Moody’s Investor Services and BBB- by Fitch Ratings, had earlier mandated a consortium of lead managers including Citigroup, Crédit Agricole, Deutsche Bank, Dubai Islamic Bank, Emirates NBD Bank, First Abu Dhabi Bank, HSBC, J.P. Morgan, Samba Financial Group, Standard Chartered Bank and The Bank of Nova Scotia, to arrange a series of virtual investor calls in key markets. Abu Dhabi Islamic Bank and Commercial Bank of Dubai acted as co-managers.
The Sukuk Certificates were distributed on a syndicated basis pursuant to Regulation S, at an initial price guidance of 6.625% on 24 June, which tightened to 6.375% later in the day. But due to robust demand from investors which saw orders totaling US$4.1 billion, the pricing tightened further, and the transaction closed at 6.125% per annum. DP World was originally seeking to raise between US$500 million to US$750 million, but due to the heavy demand, it decided to upsize the volume to US$1.5 billion.
The Certificates are perpetual securities in respect of which there is no fixed redemption (maturity) date. The Sukuk certificates are non-callable for 5.5 years. The proceeds from the transaction will be used for general corporate and balance sheet purposes, and to refinancing existing debt.
Moody’s assigned the Sukuk certificates a rating of Ba2, while Fitch assigned the certificates a BB rating (with a Stable Outlook for both). These are two notches below its Issuer Default Rating (IDR) rating of DP World. Application has been made for the Sukuk certificates to be listed for trading on the regulated market of the London Stock Exchange and on Nasdaq Dubai.
DP World is a leading enabler of global trade and an integral provider of worldwide smart end-to-end supply chain logistics, operating in three business sectors – port and terminals; parks and economic zones; and maritime and logistics services.
As at 31 December 2019, the Group managed over 150 operations in over 50 countries across six continents with a significant presence in both high-growth and mature markets. The Group aims to be essential to the future of global trade, ensuring everything it does has a long-lasting positive impact on economies and societies. As at 31 December 2019, the Group’s portfolio had a gross capacity of 91.8 million Twenty-foot Equivalent Units (TEU) and, for the year ended 31 December 2019, the Group generated gross throughput of 71.2 million TEU, revenue of US$7,685.9 million, profit for the year of US$1,194.6 million and an Adjusted EBITDA of US$3,305.6 million.
The Group continued to make several acquisitions in the first half of 2020. The ongoing coronavirus outbreak, said DP World in the transaction offer documents, has resulted in the implementation of travel restrictions, quarantines and extended shutdowns of certain businesses globally. These restrictive measures, if prolonged, could slow national economic development and reduce trade and use of the Group’s ports. The duration, impact and severity of the outbreak cannot be predicted and may be significant, particularly in the short term.
DP World has been a regular issuer of Sukuk. Its last Sukuk issuance was in July 2019 when it issued a US$1 billion Sukuk Mudaraba with a tenor of 10 years maturing in 2029. The Sukuk was issued under the company’s existing US$5 billion Trust Certificates Programme through its Cayman Islands incorporated special purpose vehicle, DP World Crescent Limited, on behalf of the Obligor, DP World Limited. That transaction was priced at a profit rate equivalent to 195 basis points over Mid-Swaps (MS).
Prior to that DP World issued a 10-Year benchmark US$1 billion Senior Sukuk Mudaraba in September 2018, also through DP World Crescent Limited, a transaction which was priced at a profit rate of 4.848% per annum.