DEWA to issue $ 500 million sukuk this week

Updated 27 February 2013
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DEWA to issue $ 500 million sukuk this week

DUBAI: Dubai Electricity and Water Authority plans to issue an Islamic bond, or sukuk, of at least $ 500 million this week, after releasing early price guidance for the deal on Tuesday.
The emirate’s sole utility, rated BBB, is aiming to sell the dollar-denominated sukuk at a profit rate in the low 3 percent area, arranging banks said.
DEWA Chief Executive Saeed Mohammed Al-Tayer indicated last week the sukuk would be $ 1 billion and that proceeds would be used to repay debt.
As one of the strongest credits in Dubai, DEWA’s sukuk is widely expected to attract strong investor demand. The company’s representatives are meeting investors in London and Kuala Lumpur this week.
“The combination of the DEWA credit and sukuk format is one that should resonate well with investors,” said Chavan Bhogaita, head of markets strategy unit at National Bank of Abu Dhabi.
“It gives them access to a credit that is one of the top tier names in ‘Dubai Inc.’ whilst being in an asset class where supply is arguably still outstripped by demand.”
DEWA last tapped global debt markets in October 2010, when it priced a $ 2 billion, dual-tranche conventional bond. The improvement in Dubai’s image among investors since then may help it win better pricing relative to the rest of the market.
Its outstanding $ 500 million 6.375 percent bond maturing 2016 was bid at 112.4 cents on the dollar yesterday afternoon to yield 2.8 percent, according to Thomson Reuters data.
Its 2020 maturity, a $ 1.5 billion bond with a coupon of 7.375 percent, was bid at about 122 cents on Tuesday to yield about 4 percent. Yields have widened about 40 bps since Jan. 10 to coincide with the general sell-off in credit markets.
However, they have stabilized since Feb. 19, which should benefit DEWA as they can issue while rates remain attractive.
Standard Chartered, Citigroup, RBS and local lenders Emirates NBD, Dubai Islamic Bank
and Abu Dhabi Islamic Bank are mandated joint bookrunners on the deal.


Costa Coffee to go solo pressed by investors

Updated 52 min 29 sec ago
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Costa Coffee to go solo pressed by investors

LONDON: Latte king Costa Coffee is to go it alone following pressure from activist shareholders on Whitbread, the global coffee chain’s parent company, a statement said Wednesday.
UK company Whitbread, which will hold onto hotel chain Premier Inn, said the spin-off is part of a restructuring drive that is set to be completed within two years.
“Given the progress Whitbread is making, we are confident that both Premier Inn and Costa will soon be businesses of sufficient strength, scale and capability to enable them to thrive as independent companies,” Whitbread chief executive Alison Brittain said in the statement.
“The board, therefore, believes that it is in the best long-term interests of Whitbread’s many stakeholders to separate Premier Inn and Costa, via a demerger of Costa,” she added.
Analysts welcomed the move.
“A cleaner operation should enable greater operational focus and afford investors greater clarity on profit and cash generation,” said analyst Greg Johnson at Shore Capital.
Whitbread’s announcement comes after activist investor, US group Elliott last week became its biggest shareholder with a six percent interest.
“The question will of course arise over whether CEO Alison Brittain jumped or was pushed into this proposal by the arrival of two activist investors on the shareholder register,” said Laith Khalaf, senior analyst at Hargreaves Lansdown stockbrokers.
Whitbread bought Costa in 1995 from founders Sergio and Bruno Costa and presently runs about 2,400 stores in the UK and some 1,400 around the world.
Its shops are popular with a wide array of coffee lovers, ranging from students in London, to journalists and Beirut, and tourists in Paris.
Premier Inn has 785 hotels in the UK plus some more in Germany and the Middle East.