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.


Hyundai teams up with VW’s Audi to boost hydrogen cars

Updated 8 min 13 sec ago
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Hyundai teams up with VW’s Audi to boost hydrogen cars

LONDON: Hyundai agreed a deal with Audi on Wednesday to collaborate on hydrogen car technology, hoping to boost an energy segment that has lagged behind battery electric vehicles.
The South Korean firm wants to increase the uptake of hydrogen cars, which are propelled by electricity generated by fuel cells but have been held back by a lack of infrastructure and the push for battery electric vehicles by the likes of Tesla.
The pair will be able to access each other’s intellectual property and share components, including any new parts developed by Audi, which is responsible for hydrogen fuel cell technology in the Volkswagen Group, the world’s biggest car seller.
Hyundai hopes that the move will create greater demand for vehicles such as its ix35 model and bring down costs to make the technology profitable.
“We want to provide to our component suppliers more chance and we want to have competition between component suppliers,” Sae Hoon Kim, the head of Hyundai’s R&D fuel cell group, told Reuters in an interview in London.
“We also want to make them to have competition with other suppliers, and that competition will bring down the cost.”
Carmakers such as Toyota have touted the benefits of hydrogen vehicles, which take less time to refuel than the recharge times of battery electric cars, but are expensive and suffer from a lack of refueling stations.
Many carmakers are focusing on battery electric vehicles, which can take between half an hour and half a day to recharge, but are increasingly able to use a growing network of charging points.
Auto firms are teaming up to share the cost of developing greener technologies to replace combustion engines as regulators around the world crack down on emissions. GM and Honda have a partnership to jointly develop electric vehicles with hydrogen fuel cells that are expected to go on sale in 2020, while BMW is working with Toyota.
Kim said that a toughening of European Union carbon emission limits in 2025 would create a need for more hydrogen cars.
Hyundai sold 200 such models last year and expects to sell thousands this year, but Kim said profitability was still far off.
“100,000 or 300,000 vehicles per year per company, when that comes, I think we can make money,” he said.