Abu Dhabi-based different funding group Ittihad Worldwide Funding LLC has priced a benchmark five-year, non-call two years, Reg S sukuk of USD 550 million at par, with a coupon of seven.375 per cent. It carries a make-whole name provision at T+50 foundation factors. The ultimate guide exceeded USD 2 billion, excluding lead supervisor curiosity, signalling sturdy investor demand.
The issuance marks a big milestone for Ittihad, which is rated BB- by S&P International Scores and BB- by Fitch Scores. Preliminary worth ideas had been floated within the 7.75 per cent space however the agency managed to tighten pricing to 7.375 per cent at par. The maturity profile is 5 years with no name for the primary two years, giving traders a transparent maintain interval earlier than the issuer could train the decision. The issuance was structured underneath Regulation S and Rule 144A codecs, broadening entry to international traders.
Ittihad’s alternative of construction and pricing displays each its credit score standing and the present market urge for food for Gulf-based issuers within the high-yield area. The BB- score locations the agency in sub-investment-grade territory—but the profitable oversubscription suggests investor confidence within the firm’s technique and regional backing. Analysts notice that whereas the group stays extremely leveraged, the refinancing to increase its debt maturity is seen as a credit score constructive.
The sturdy bookbuilding—guide dimension topping USD 2 billion for a USD 550 million issuance—signifies tight investor provide within the asset class mixed with demand for yield within the Gulf area. The inclusion of the MWC and a non-call interval of two years makes the instrument extra enticing to fixed-income traders in search of early-stage liquidity. These options assist compensate for the issuer’s credit score threat profile.
Operationally, Ittihad has diversified pursuits spanning printing and writing paper, tissue, metals changing, constructing supplies, environmental companies and different enterprise segments. Its 2023 annual report confirmed revenues of AED 10.43 billion and working revenue of AED 322 million, however finance prices of AED 285 million drove web revenue all the way down to AED 24.17 million. Leverage stays elevated, with adjusted debt-to-EBITDA estimated round 7.5x for 2023, in response to S&P. The score companies additionally flagged the commoditised nature of most of the firm’s end-markets and geographic focus dangers as offsetting strengths comparable to beneficial procurement place and copper stock liquidity.
Market commentators see the transaction as a part of a wave of Gulf issuers tapping the worldwide sukuk market as traders search higher-yielding paper amid international fee stabilisation. The regional backdrop of infrastructure funding, industrial diversification and rising credit score issuance helps this dynamic. On the similar time, issuers comparable to Ittihad face margin pressures from international raw-material value inflation, stock build-up and smooth demand in cyclical segments, which score companies proceed to observe.