Case Name :      Emirates Airline: A Billion-dollar Sukuk-Bond Issue

Authors :           Emir Hrnjic, Harun Kapetanovic, David Reeb

Source :             Ivey Publishing

Case ID :            W14084

Discipline :        Finance

Case Length :    19 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Emirates Airline (EA) needs to fund the purchase of 30 new A380 aircraft. On March 11, 2013, EA announced plans to issue US$1 billion of Islamic bonds (sukuk) and $750 million of regular bonds. These bonds arguably share similar risks and seniority even though the sukuk bonds sold with a lower implied yield. This difference in pricing for securities with similar default risks seems at odds with conventional finance thinking. Against this backdrop, the EA treasury department must decide on the appropriate funding for this next batch of A380 airplanes.