Port operator DP World has hired a group of banks for a potential sale of perpetual US dollar-denominated Islamic bonds or sukuk, a document showed on Monday.
The Dubai-based company, which operates ports around the world from Hong Kong to Buenos Aires, will use the proceeds for general corporate purposes, including refinancing, the document from one of the banks handling the sale showed.
Citi, Deutsche Bank and JPMorgan will arrange investor calls in Asia, the Middle East and Europe on Monday, to be followed, subject to market conditions, by the issuance of perpetual US dollar-denominated Islamic bonds non-callable for 5-1/2 years.
The deal will be benchmark in size, the document said, which means at least $500 million.
Perpetual bonds are similar to an equity instrument in that they have no maturity date.
Dubai Islamic Bank, Emirates NBD Capital , First Abu Dhabi Bank, HSBC, Crédit Agricole, Samba Financial Group, Scotiabank and Standard Chartered Bank are also working on the deal, the document showed.
DP World, rated Baa3 by Moody’s and BBB- by Fitch, is also considering issuing benchmark perpetual euro-denominated bonds with a six-year, non-call period, the document showed.
Moody’s has assigned the proposed sukuk and bonds a rating of Ba2, two notches below DP World’s rating. Moody’s said this was “because they will be deeply subordinated to the senior unsecured obligations of DP World and its subsidiaries and rank senior only to ordinary shares.”
“Moody’s views this transaction as credit positive because DP World will replace a sizeable portion of the existing bridge with a longer dated instrument,” the ratings agency said.
“However, Moody’s expects the improvement in credit ratios from this transaction to be modest.”
DP World had net debt of $12.85 billion at the end of 2019, up from $7.78 billion a year earlier, according to an investor presentation seen by Reuters.
In February, DP World returned to full state ownership in a deal that valued it at $13.9 billion and which will help the company repay some of its borrowings.