ABU DHABI (Reuters) – Emirates Steel, the largest steel producer in the United Arab Emirates, has refinanced $650 million of debt with a new loan and sukuk or Islamic bond, sources close to the transaction told Reuters.
The company owned by Abu Dhabi’s Senaat, a state-owned investor in the emirate’s industrial sector, raised $1.3 billion in credit facilities in 2014, due in 2022.
It hired BNP Paribas BNPP.PA to coordinate a $400 million sharia-compliant loan financing, Reuters reported in September.
Last month, Emirates Steel’s parent Senaat issued a $300 million sukuk.
The $1.3 billion loan had been halved to $650 million via scheduled repayments since 2014.
The residual balance was settled in full with funds from the $400 million loan and the Senaat sukuk, one of the sources close to the transaction said.
The revised debt structure of Emirates Steel is currently an Islamic four-year term loan of $400 million and the parent company’s $300 million sukuk, the source said.
“The loan and the sukuk tied together nicely for the refinancing,” said a banker involved in the deal.
Emirates Steel declined to comment.
Some companies in the Gulf are refinancing their debt obligations ahead of maturity, or adding new leverage to their balance sheets, to avoid having to pay higher debt costs later due to expected increases in global interest rates.
In November, Emirates Steel, signed a high-value four-year contract to buy iron ore pellets from Brazil’s Vale VALE3.SA.