Amlak to sell Islamic bonds worth $1.3bn

Dubai-based mortgage lender Amlak Finance said on Sunday it planned to sell as much as 4.8 billion dirhams ($1.31 billion) worth of convertible and non-convertible Islamic bonds this year to help finance expansion.

"This is an initial approval after the extraordinary general meeting for the board to look into these programmes," Arif Al-Harmi, Amlak chief executive, told newswire Reuters.

Amlak plans to issue convertible Islamic bonds, or sukuk, worth up to 1.8 billion dirhams and as much as 3 billion dirhams of non-convertible sukuk, it said in a statement.

Banks have yet to be mandated for the sales, Al-Harmi said, adding that it was part of the company's 2008 financing requirements.

The firm plans to raise about 6 billion dirhams this year, including through the sale of covered bonds - debt securities backed by cash-flow from mortgages - or Islamic bonds that are convertible to shares, Amlak Chairman Nasser Al-Shaikh told Reuters in February.

Sukuk comply with Islam's ban on the receipt of interest, and are typically based on physical assets which pay a dividend or rent to bondholders.

Gulf Arab issuers have slowed borrowing plans as concerns over the US economy and the falling dollar have pushed issuers to weather market conditions.

Amlak, an affiliate of Emaar Properties, will launch operations in Qatar and Jordan this year and has applied for a licence in Bahrain, Al-Harmi said.

"We are also in discussions with partners for Syria," he said.

Amlak delayed a sale of Islamic bonds planned for the fourth quarter of 2007 because of the fallout from the credit crisis triggered by US mortgage defaults.

Demand for mortgages is surging in the UAE, where Dubai kicked off the Gulf Arab real estate boom in 2002 by allowing foreigners to invest in property.