Aldar Properties, the second-biggest real estate developer in the United Arab Emirates, plans to tap lenders for a third time this year to help finance some of its $50 billion of projects.
Despite turmoil in the global credit market, the state-controlled company may borrow from banks or sell bonds, adding to the $4.63 billion of debt it has secured so far in 2007, including the world's third-biggest Islamic bond sale, Chief Financial Officer Shafqat Malik told Reuters on Sunday. "Between now and the end of the year, there is going to be borrowing," Malik said, declining to give details.
The company expects to develop residential, tourism and commercial projects worth as much as $50 billion during the next 5 to 10 years, Malik said.
This year through 2009 will be "crunch years" for borrowing at the two-year-old company before tailing off in 2010, Malik said, declining to give an outlook for needs at the Abu Dhabi-controlled firm. The global credit crunch, which has seen companies either delay, cut down or cancel borrowing plans as investors recoil from risky assets, has had no direct impact on Aldar, Malik said.
"Still, it's made investors more nervous and we need to take that into account," he said, without being more specific.
In February, Aldar sold $2.53 billion of 5-year bonds that comply with an Islamic ban on the payment of interest, offering investors a 5.77 percent return, or 65 basis points above the US dollar mid-swap rate at the time of pricing. A $2.1 billion 4-year loan, finalised in June, was priced at 90 basis points above the London Interbank Offered Rate. Arranging banks have included Morgan Stanley & Co, Barclays Bank and Credit Suisse.
Through its holdings in Aldar and other companies, Abu Dhabi, the Middle East's third-largest oil producer, is spending billions of dollars on real estate, tourism and cultural projects to help diversify its economy away from oil.