* $762.5 mln convertible bond part of rescue package
* Aldar shares fall 3.8 pct in Abu Dhabi trade
(Recasts, adds share price reaction, comments, background)
DUBAI, March 7 Aldar Properties ALDR.AD will
pay 4 percent interest on 2.8 billion dirhams ($762.5 million)
of convertible bonds to be sold as part of its rescue package, a
much higher rate than analysts had expected.
Abu Dhabi developer Aldar, which is selling the bonds to
state-owned fund Mubadala, announced the coupon in a statement
to the bourse on Monday.
Analysts said the market was expecting the interest charged
by Mubadala to be notional in view of the government's rescue of
the struggling property firm.
"Most probably, the market thought it would be an interest-
free convertible bond but clearly that's not the case. This may
be the reason for the Aldar shares to drop," said Ahmed Badr,
Credit Suisse research analyst.
Shares of Aldar were down 3.8 percent at 0850 GMT,
underperforming the Abu Dhabi index .ADI that was 0.2 percent
Aldar was thrown a $5.2 billion lifeline by Abu Dhabi in
January and announced plans to sell properties such as the
Ferrari theme park, the world's first park based on the Italian
sports car and racing teams. [ID:nLDE70B0LX]
The convertible bond was approved by shareholders last
"Mubadala are diluting the existing (Aldar) shareholders by
taking more money out of the company by way of the coupon," said
an Abu Dhabi-based banker who did not want to be identified.
"But arguably, without Mubadala, Aldar would be struggling
to stay afloat," the banker said, adding that Mubadala would
also need a tangible return on its investment in Aldar.
Meanwhile, credit rating agency Moody's said in a statement
that state-owned companies in the oil-rich emirate of Abu Dhabi
are likely to see continued support from the government. It
highlighted the recent bailout of Aldar and district cooling
firm Tabreed TABR.DU. [ID:nLDE72601H]
($1=3.672 Uae Dirham)
(Reporting by Praveen Menon and Rachna Uppal; Editing by