Shopping mall and hospitality developer Majid Al Futtaim (MAF) has issued a US$500 million green Sukuk facility on the 25th May 2023. Proceeds from the facility, which is the group’s fourth green capital market effort, will be used to refinance part of a current US$800 million bond due in May 2024.
The transaction received an orderbook in the neighborhood of US$3 billion, receiving interest from local and international investors. The pricing tightened from the initial pricing guidance of 175bps over US treasuries to the final pricing of 140bps over US treasuries.
While the pricing for the facility was favorable, Alex Roussos, a partner at Dentons which acted as the legal counsel for the banks for the issuance, told ISFI that the pricing environment for the facility was tougher compared with when MAF issued its previous facility.
“[It is] partly a result of inflationary pressures and the upward effect this is having on bond yields,” Alex explained.
According to Stuart Ure, a partner at Clifford Chance which acted as the legal counsel for MAF for the issuance, the transaction underscores the investor demand for Shariah compliant investments in sustainable assets in renewable energy, among others.
According to Alex, the proceeds from the issuance, which is irrevocably guaranteed by Majid Al Futtaim Holding, will be used to settle a tender for MAF’s SPV MAF Global Securities’ 4.75% notes.
“It’s part of MAF’s prudent liquidity and liability management process. [The] outstanding bond was coming up to maturity next year and the company saw an opportunity to refinance,” Alex told ISFI.
The facility follows two previous sustainable Sukuk issuances in 2019. MAF’s US$600 million debut facility was touted as the world’s first benchmark green Sukuk issued by a corporate in the GCC.
Also as part of its sustainable financing efforts, MAF secured a US$1.5 billion sustainability-linked loan (SLL) facility in July 2021. Over a dozen undisclosed banks participated in the syndicate credit revolving facility with First Abu Dhabi Bank leading the syndication.
In addition to being the largest SLL in the MENA real estate sector, the facility was reportedly the first ‘penalty-only’ loan and the largest non-government-linked SLL in the region.
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MAF’s Refinancing Green Sukuk US$500 million  25th May 2023 |
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| Summary of terms and conditions | |
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Issuer |
MAF Sukuk |
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Obligor |
Majid Al Futtaim Holding, Majid Al Futtaim Properties |
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Size of issue |
US$500 million |
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Mode of issue |
Drawdown under program |
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Purpose |
To fund or refinance a portfolio of existing eligible projects within eligible categories as set out in the MAF Group’s Green Finance Framework |
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Tenor |
10 years |
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Issuance price |
99.02% |
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Profit rate |
5% per annum payable semi-annually in arrears |
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Currency |
US dollar |
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Maturity date |
1st June 2033 |
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Global coordinator and lead manager(s) |
Citigroup, HSBC, Standard Chartered Bank |
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Bookrunner(s) |
Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, First Abu Dhabi Bank, HSBC, Standard Chartered Bank |
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Governing law |
English law |
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Legal advisor(s)/council |
Clifford Chance for MAF, Dentons for the banks |
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Islamic structure |
Wakalah, Murabahah |
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Listing |
Euronext Dublin |
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Underlying asset |
Real estate and commodity Murabahah |
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Rating |
‘BBB’ by S&P Global Ratings, Fitch Ratings |
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Shariah advisor(s) |
Shariah boards of the above banks |
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Tradability |
Yes |
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Face value/minimum investment |
US$200,000 and integral multiples of US$1,000 in excess thereof |