SHUAA Capital EGM approves AED 180 mill bond Issue

SHUAA Capital’s extraordinary general meeting Sunday approved a resolution to borrow up to AED180 million by way of a medium-term bond issue, in a move considered the first for a public company in the UAE.

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By  Massoud Derhally Published  January 14, 2002

SHUAA Capital’s extraordinary general meeting Sunday approved a resolution to borrow up to AED180 million by way of a medium-term bond issue, in a move considered the first for a public company in the UAE.

Once completed, this issue will be the second issue for a UAE company, the first being Emirates Airlines in 2001 for AED 1.5 billion. SHUAA Capital will be the first local, non-government public shareholding company to issue such a bond. SHUAA current move parallels the high level of activity in the international bond market by many private companies that are borrowing to take advantage of what some industry analysts describe as a record low interest rates globally.

“The planned bond issue is another pioneering move for SHUAA Capital and fits well with its ongoing plans to expand its primary activities as a provider of financial services in the UAE, including the underwriting of securities,” said Majid Saif Al-Ghurair, chairman of SHUAA Capital.

“The company is in advanced talks with a number of local and GCC financial institutions, regarding the terms and pricing of the proposed issue, which will be by way of a private placement,” said Iyad Duwaji, CEO of SHUAA Capital. “Strong interest has emerged from Kuwait, where the market for such securities is well developed, far more so than in the UAE. A number of Kuwaiti companies issued Kuwaiti Dinar bonds last year, but no non-Kuwaiti companies have issued in Kuwait for a long time,” added Duwaji.

The company will utilise the proceeds from the issue to support SHUAA’s general business activities, helping it reduce its reliance on short-term borrowing and better maturity matching of its assets and liabilities according to Duwaji.

He added that SHUAA Capital is seeking an independent credit rating which, he hopes, will make it easier for banks to assess its credit worthiness in the future. Local banks have until now concentrated on commercial and consumer lending. Extending loans to service or financial companies is less well-understood and thus more difficult to obtain.

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