Flydubai secures $500m to refinance the carrier's five-year sukuk​​​​​​​​​​​​​​​​​​​​​

The budget airline's debut $500m Islamic bond, which matures on Tuesday, was issued in November 2014

The new facility, completed on November 14, will refinance Flydubai's first Islamic bond. Courtesy Flydubai

Flydubai raised $500 million (Dh1.8 billion) to refinance the budget carrier’s debut five-year sukuk, which is set to mature this week, the airline said on Sunday.

Emirates NBD, Dubai’s largest lender by assets, and Noor Bank, a Sharia-compliant lender being acquired by its larger rival Dubai Islamic Bank, acted as global coordinators on the deal, jointly underwriting the transaction, according to a statement. The two banks were joined by Dubai Islamic Bank to be the “mandated lead arrangers and bookrunners" on the facility.

“We continue to explore ways to further diversify our sources of funding, while at the same time optimising our cost of funding,” Ghaith Al Ghaith, chief executive at flydubai said. “We are pleased to see the healthy appetite in the market that has enabled us to successfully raise the five-year term loan for $500m to refinance our first sukuk issued in 2014.”

The carrier’s first $500m landmark sukuk, which matures on Tuesday was issued in November 2014. At the time, flydubai said the five-year sukuk, which it planned to use “for general corporate purposes and refinancing”, was oversubscribed by more than six times.

The new facility, completed on November 14, will refinance the carrier’s first Islamic bond.

“The financing demonstrates our commitment towards supporting flydubai. As a leading financial institution in the region, our aim is to provide innovative solutions to our valued clients in order to achieve their long-term objectives,” said Ahmed Al Qassim, senior executive vice president & group head, corporate & institutional banking at Emirates NBD.

At last week's Dubai Airshow, Sheikh Ahmed bin Saeed, the chairman of flydubai, said the airline could see "significant" impact in the second half of its fiscal year if the global ban on the Boeing 737 Max continues. The carrier is the biggest customer of the grounded jet outside the US,

"Flydubai lost a lot during the summer period till now, so I would say that they will miss at least two or three periods of good revenue and profit," Sheikh Ahmed said, noting that Christmas, New Year and Easter holiday periods are coming up. "Whether [the grounding] goes beyond that will be seen, but that will be significant."