EM CEEMEA CREDIT
FV @ 5.25% area or T+100bp (z+142bp)
- Aldar Investment Properties LLC (the Sukuk format issuing vehicle for parent Aldar Investment Properties, ALDAR) has mandated banks for investor call and meetings ahead of a senior unsecured Green Sukuk new issue deal, indicating a 10Y tenor with USD500mn size (WNG). We sketch our FV considerations based on the limited information available. We mainly look at ALDAR seasoned bonds, with some reference to similarly shaped peer EMAAR (Baa2/BBB/-) and steeper relevant sovereign curves. We anchor our analysis vs ALDAR’s previous senior deal issuance back in May ’24. To put things in perspective, ALDAR spreads have been rather stable in a widening spread context (see chart below). We add 5bp to the seasoned May34s charting @ z+137bp for curve extension, deriving FV @ z+142bp or T+100bp at 5.25% yield area. That is a 25bp premium to higher rated, recently launched RAKS (-/A/A+) 5 Mar35 @ z+117bp (issued @ T+80bp or z+120bp).
- A leading market position within UAE with strong land bank and concentrated development backlog in less volatile Abu Dhabi RE market coupled with a well-diversified product mix (property development via Aldar Properties and property portfolio management through Aldar Investment Properties LLC subsidiary) contribute favourably to ALDAR’s credit assessment. Mitigating factors constraining the ratings relate to geographic concentration, as well as volatility from the property development side of the business.
- ALDAR reported solid FY24 results as it continues to see good demand from international and expat buyers attracted by its premium development offering. Rev’s at AED 23bn beat, boosted by both development revenues +90% YoY to AED15.7bn and investments +21% YoY to AED7bn. EBITDA was reported +51% YoY at AED 7.7bn, with net profit +47% YoY at AED6.5bn. Strong capital structure, with cash and equiv. of AED15bn and modest leverage with net debt to EBITDA at 0.8x with modest debt maturity profile. The Co.’s backlog stands at AED54.6bn, with UAE accounting for AED45.9bn. Backlog should suffice for the next 2-3 years of revenues. We don’t think the short-dated nature of the back log is a problem given the state owns a stake in the ALDAR and the Co.’s strategic role in developing UAE.
376 words