Abu Dhabi-based alternative investment group Ittihad International Investment LLC has priced a benchmark five-year, non-call two years, Reg S sukuk of USD 550 million at par, with a coupon of 7.375 per cent. It carries a make-whole call provision at T+50 basis points. The final book exceeded USD 2 billion, excluding lead manager interest, signalling strong investor demand.

The issuance marks a significant milestone for Ittihad, which is rated BB- by S&P Global Ratings and BB- by Fitch Ratings. Initial price thoughts were floated in the 7.75 per cent area but the firm managed to tighten pricing to 7.375 per cent at par. The maturity profile is five years with no call for the first two years, giving investors a clear hold period before the issuer may exercise the call. The issuance was structured under Regulation S and Rule 144A formats, broadening access to global investors.

Ittihad's choice of structure and pricing reflects both its credit standing and the current market appetite for Gulf-based issuers in the high-yield space. The BB- rating places the firm in sub-investment-grade territory-yet the successful oversubscription suggests investor confidence in the company's strategy and regional backing. Analysts note that while the group remains highly leveraged, the refinancing to extend its debt maturity is viewed as a credit positive.

The strong bookbuilding-book size topping USD 2 billion for a USD 550 million issuance-indicates tight investor supply in the asset class combined with demand for yield in the Gulf region. The inclusion of the MWC and a non-call period of two years makes the instrument more attractive to fixed-income investors seeking early-stage liquidity. These features help compensate for the issuer's credit risk profile.

Operationally, Ittihad has diversified interests spanning printing and writing paper, tissue, metals converting, building materials, environmental services and other business segments. Its 2023 annual report showed revenues of AED 10.43 billion and operating profit of AED 322 million, but finance costs of AED 285 million drove net profit down to AED 24.17 million. Leverage remains elevated, with adjusted debt-to-EBITDA estimated around 7.5x for 2023, according to S&P. The rating agencies also flagged the commoditised nature of many of the company's end-markets and geographic concentration risks as offsetting strengths such as favourable procurement position and copper inventory liquidity.

Market commentators see the transaction as part of a wave of Gulf issuers tapping the international sukuk market as investors seek higher-yielding paper amid global rate stabilisation. The regional backdrop of infrastructure investment, industrial diversification and rising credit issuance supports this dynamic. At the same time, issuers such as Ittihad face margin pressures from global raw-material cost inflation, inventory build-up and soft demand in cyclical segments, which rating agencies continue to monitor.

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