PC: Gulf News
Dubai listed utility giant Tabreed has made a major announcement about its financial strategy, announcing that it will issue up to $ 2 billion in further non convertible debt instruments. The issuance of such this can be of many forms of debt such as bonds or sukuk, which is approved by the shareholders during the Annual General Assembly meeting held recently. The company said the offering could be done in one or more tranches, enabling the flexibility in how they approach the capital markets.
The decision follows that of the debt market, where Tabreed brought $700 million green sukuk to issue in recent months. The demand was so massive that this offering was nearly 2.6 times oversubscribed. This green sukuk will be used by the net proceeds to partially finance or refinance projects that are in line with Tabreed’s commitment to sustainability and environmental responsibility.
Later this month, the DIFC Municipality will hand over the management of Dubai cooling network developer Tabreed to the Abu Dhabi government in a deal that cemented the company’s investment grade credit ratings. Ratings at Moody’s assign the company Baa3, and Fitch’s B rating. They are in line with Tabreed’s balance sheet and its ability to meet debt obligations, essential for maintaining the confidence of the investors and attracting further investments.
It’s a strategic move by Tabreed, to issue non convertible debt (expenses capacity to raise substantial capital without diluting the equity of the existing shareholders). This being in a time of the current economic condition where companies would want to optimize their capital structure while ensuring that they have the money to support the growth and expansion projects. Tabreed then opted in not choosing convertible debt as they would be securing finance while keeping its shareholder base intact.
Besides, this debt issuance will raise finances to fund Tabreed’s on-going projects as well as future growth opportunities. In the face of rising need for energy efficient cooling solutions in the region, the company is routinely expanding its business and improving its service offerings in district cooling. Tabreed’s focus on strategic growth and sustainability provides it the leadership in the utility sector particularly in the context of the UAE’s overall economic objectives.
Finally, Tabreed’s decision to emerge up to $2 billion of non convertible debt shows its proactive capital management attitude and its desire for sustainable growth. The company has good credit ratings and a solid track record in the capital market that it can use this new funding to improve its operations and keep on adding value to its shareholders.
