Etihad Airways (EY, Abu Dhabi Int'l) plans to sell a US dollar-denominated sukuk, or “sharia-compliant” Islamic bond, as part of a USD3 billion sukuk programme expected to be rated A by the American credit rating agency Fitch, Reuters reported on October 20 citing a document issued by a bank leading the deal.

It will be a “transition” sukuk, according to the document. Transition bonds are a relatively new asset class targetted at industries with high greenhouse gas emissions, the proceeds of which allow them to raise capital with the goal of becoming “greener” by gradually switching to more environmentally sustainable operations.

The Abu Dhabi government-owned carrier has reportedly hired HSBC and Standard Chartered as both global coordinators and “joint sustainability structuring agents” for the planned sukuk. Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, and Mashreq Bank will also be involved in the measure.

The five-year bond, to be issued depending on market conditions, will be part of a USD3 billion sukuk programme that Fitch is expected to give an A rating to. A source familiar with the process told Reuters that the issuance is likely to reach at least USD1 billion.

According to the document seen by the news agency, a series of fixed income investor calls was due to commence on October 22.

The same document also launched an invitation to holders of Etihad Airways’ outstanding USD1.5 billion 3.86% five-year sukuk maturing on November 30, 2021, to tender these notes for Etihad to purchase for cash.

Etihad Airways had not responded to ch-aviation’s request for comment at the time of going to press.