Aldar Investment, a subsidiary company of Aldar Properties, issued $500 million subordinated perpetual notes to Apollo Global Management at a coupon rate of 5.625% for the first non-call period of 15 years.
The subordinated perpetual notes are part of Apollo’s $1.4 billion investment of strategic capital into Aldar’s transformational growth initiatives, which was announced in February 2022. The commitment also includes a $500 million investment into a land joint venture, as well as $400 million in common equity and mandatory convertible preferred equity in Aldar Investment.
The subordinated perpetual notes have been assigned a Baa3 rating by Moody’s, which has also reaffirmed Aldar Investment’s Baa1 rating, the highest credit rating for a non-government corporate in the region.
Greg Fewer, Chief Financial and Sustainability Officer at Aldar Properties, commented: “The terms of this ground-breaking issuance reflect the unique strength of Aldar’s best in class investment property platform. Our long-term strategic partnership with Apollo will accelerate Aldar’s transformative growth agenda, allowing us to build significant scale and enhance diversification of our high-quality portfolio of income-generating assets.”
The perpetual subordinated notes are the first to be issued by Aldar and the largest corporate hybrid private placement in the MENA region, with the longest non-call period.
What are subordinated perpetual notes?
A perpetual subordinated note is a type of debt that continues indefinitely and has no maturity date. These notes pay creditors a steady stream of interest forever. The principal is never repaid as the loan is perpetual, so the interest stream never ends. The interest rate is based on the borrower’s creditworthiness, as well as prevailing interest rates.
Perpetual bond owners receive interest payments as long as they own the bond, just like the owners of stocks with dividend payments throughout the ownership period.
