DAE Moves Ahead With Seven-Year Dollar Bond

(MENAFN- The Arabian Post) Arabian Post Staff -Dubai

Dubai Aerospace Enterprise Ltd has moved to the market with a mandate for a benchmark-sized, dollar-denominated Regulation S senior unsecured bond with a seven-year tenor, marking a strategic step in its funding programme amid steady demand for aviation finance assets. The transaction, expected to draw interest from global fixed-income investors, reflects confidence in the aircraft leasing sector's cash-flow resilience and in the issuer's balance-sheet strength.

Dubai Aerospace Enterprise Ltd, commonly known as DAE, carries long-term investment-grade ratings of Baa2 with a stable outlook from Moody's and BBB with a stable outlook from Fitch Ratings. The planned issuance will be offered under Regulation S, targeting offshore investors and excluding US-based buyers, a structure frequently used by Middle East issuers seeking broad international distribution.

The mandate signals DAE's intent to secure medium-term funding at a point when aviation markets continue to normalise after the sharp dislocations of earlier years. Leasing companies have benefited from sustained airline demand for fuel-efficient aircraft, constrained manufacturer delivery schedules, and a preference among carriers to lease rather than purchase outright. These factors have supported lease rates and asset values, improving visibility on cash generation.

This seven-year bond plan underscores DAE's funding strategy, executives familiar with the transaction say, as the company looks to extend its maturity profile while maintaining ample liquidity. Proceeds are expected to be used for general corporate purposes, including refinancing existing debt and funding aircraft acquisitions, consistent with DAE's stated capital management approach.

DAE operates one of the world's largest aircraft leasing platforms, with a fleet diversified across aircraft types, airlines, and geographies. Its portfolio includes narrow-body and wide-body aircraft placed with carriers in Europe, Asia-Pacific, the Americas, the Middle East, and Africa. This diversification has been a key factor cited by rating agencies in maintaining the company's investment-grade status, alongside conservative leverage targets and a focus on long-term lease contracts.

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Market participants note that the choice of a seven-year tenor aligns with investor appetite for intermediate maturities, which often strike a balance between yield and duration risk. Dollar-denominated aviation bonds from established lessors have continued to attract asset managers seeking exposure to hard assets with predictable income streams, particularly when supported by investment-grade ratings.

Issuance conditions for Gulf-based corporates have been shaped by expectations around global interest-rate trajectories and geopolitical considerations, but primary markets have remained open for well-rated borrowers. For DAE, tapping the market at benchmark size may also serve to reinforce its curve and provide pricing references for future transactions.

Analysts tracking the sector point out that aircraft lessors with strong sponsor backing and disciplined fleet management have navigated cycles more effectively than smaller peers. DAE is ultimately owned by Investment Corporation of Dubai, which has historically provided strategic support while allowing the lessor to operate with commercial independence. That ownership structure, combined with prudent financial policies, has underpinned investor confidence.

The bond is expected to be marketed to institutional investors across Europe, Asia, and the Middle East, with lead managers engaging accounts that are familiar with aviation risk. Regulation S format documentation typically adheres to international disclosure standards, offering transparency on fleet composition, lessee concentration, and maintenance obligations, all of which are closely scrutinised by credit investors.

Within the broader aviation finance landscape, the deal comes as airlines continue to adjust capacity and fleet strategies in response to travel demand patterns and environmental requirements. Leasing remains central to these plans, particularly as carriers seek flexibility and access to next-generation aircraft without committing large upfront capital.

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DAE has previously accessed both bank and capital markets, maintaining a mix of secured and unsecured funding. The proposed senior unsecured structure signals confidence in unsecured market access and in the strength of the company's balance sheet. Observers say successful execution would further demonstrate the depth of demand for high-quality aviation credits from the Gulf.

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