Emirates Airline to launch international bonds
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By K. S. R. Menon The Daily Star 24 December 2003
Emirates, the Dubai-based international airline, announced plans to launch a dollar-denominated seven-year international bond
issue for an initial amount of $400 million in 2004, offering investors a floating rate interest.
Sheikh Ahmed bin Saeed al-Maktoum, chairman of Emirates, said this was the first time Emirates will have a bond issue listed outside Dubai. The bond, likely to be listed in Luxembourg, will open early next year, he said. It will be listed also on the Dubai International Financial Center (DIFC) once the Center becomes operational.
Emirates also indicated that the new securities have not been, and will not be, registered under the United States Securities Act of 1933. Thus, they may not be offered or sold within the United States or to, or for the account or benefit of, US citizens, except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act.
“The bond will be joint-lead-managed by HSBC, Emirates Bank International, National Bank of Abu Dhabi and National Bank of Dubai. It is anticipated that other banks will be invited into the deal to join the management group in due course,†Maktoum said.
This issue will represent Emirates’ second foray into the bond markets. In June 2001, Emirates issued the first-ever UAE dirham bond which was closed at 1.5 billion dirhams (about $400,000) due to heavy investor over-subscription within the UAE. This was also the first bond to be listed on the Dubai financial markets.
With the new bond issue announced today, Emirates will be aiming to develop an investor base outside the UAE, both within the rest of the Middle East and outside.
Following the earlier UAE dirham bond issue, the new bond signals Emirates’ resolve to assert itself as a pioneering GCC institution in the debt capital markets. This US dollar-denominated bond will be the first-ever international issue by a GCC-based corporation.
Sheikh Ahmed said the bond issue was part of a strategic decision to open up alternative sources of finance and investment to raise funds for Emirates’ major expansion program planned for the coming years.
The new US dollar bond issue is intended to introduce Emirates to new classes of investors who might be attracted to other Emirates bonds in the future, should they be launched. The bond will be subject to the stabilization rules of the Financial Services Authority, UK.
Established in 1985, Emirates Airline declared a record $247 million profit in the 2002-03 financial year, an increase of 94 percent over the previous year, bucking the worldwide downturn in the industry after Sept. 11, 2001.
The world’s fastest-growing airline, Emirates is also one of the world’s five most profitable. Its fleet of 59 wide-bodied airplanes is among the youngest in the skies, with an average age of just three years. The airline plans to more than double its size to 125 aircraft by 2010.
Emirates announced the largest order in commercial aviation history at the 2003 Paris Air Show, when it added 71 new Airbus and Boeing aircraft worth $19 billion to its order book, which now stands at 103 aircraft worth $26 billion. The airline is the launch carrier for the new ultra long-haul A340-500, which started service on Dec. 1 on the Sydney route.
It also was the first airline to order the revolutionary A380 double-decker in 2001 and will be the main launch carrier for the innovative A340-600. In 2006, Emirates will receive the first of 45 A380-800s on order, making it the largest buyer of the yet-to-fly super-jumbo aircraft.
Emirates operates services to 72 cities in 50 countries in Europe, North America (cargo only at present), the Middle East, Africa, the Indian subcontinent and the Asia-Pacific. In 2003, it inaugurated services to Auckland, Moscow and Brisbane. Next year, it starts services to Lagos, Accra, Vienna, Glasgow, Shanghai and the US.
Besides the airline, the companies in Emirates Group includes Emirates Destination and Leisure Management, Emirates Holidays, Arabian Adventures, Al-Maha Resort, Emirates SkyCargo, Dnata, Mercator, Transguard and Galileo.
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