Aldar Issues $1bn Hybrid Notes

The issuance by Aldar at “PJSC” level represents the largest conventional hybrid in the Middle East.

The transaction also achieved the highest rating, and the tightest credit spread at issuance for a corporate hybrid in the Central and Eastern Europe, Middle East and Africa (CEEMEA) region.

Aldar issues $1bn hybrid notes

The initiative introduces a hybrid layer to Aldar’s capital structure for the first time, reinforcing the company’s strong balance sheet and credit profile, while enhancing financial stability and resilience.

Proceeds will support the continuation of Aldar’s transformational growth plan and its strategic priorities, including landbank replenishment and expansion, develop to hold portfolio, and acquisitions.

Underscoring strong investor confidence in Aldar’s financial strength, strategic direction and potential for growth and value creation, the issuance was oversubscribed by 3.8 times.

Total orders exceeded $4.9bn from a wide range of institutional investors across diverse geographies.

The final allocation comprises investors from:

• Middle East and North Africa: 41 per cent
• United Kingdom: 38 per cent
• Europe: 9 per cent
• North America: 8 per cent
• Asia: 4 per cent

Faisal Falaknaz, Group Chief Financial and Sustainability Officer at Aldar, said: “The strong appetite for this issuance from a broad base of international institutional investors is a statement of confidence in Aldar’s vision and strategic direction.

“The company has carved a credible and proven track record of delivering measured and sustainable growth, and this landmark hybrid issuance supports the continued execution against our growth ambitions by further optimising our capital structure, setting firm foundations for Aldar to pursue a strategy to deliver significant value creation for all our stakeholders in the coming years.”

With characteristics of debt and equity, the unsecured, subordinated 30.25-year notes provide investors with an initial yield of 6.625 per cent with a non-call period extending to 7.25 years.

The coupon payments, which will be distributed semi-annually, may be deferred for up to five years and are both cumulative and compounding, providing additional flexibility to Aldar’s capital structure.

In January 2025, Moody’s reaffirmed Aldar’s Baa2 credit rating with a stable outlook and assigned a standalone credit rating of Baa3 to the hybrid notes.

This rating reflects Aldar’s robust financial position, strong standing in the market, and the innovative structure of the issuance, which for ratings purposes is treated as equity and debt in equal measure.

However, as a debt instrument, the issuance is both non-dilutive and accretive for Aldar equity investors, with proceeds used to pay down senior debt to enhance Aldar’s overall credit profile while preserving debt capacity to support its upcoming growth initiatives and pipeline.