Differences in investor clienteles

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Reference no: EM132970036

EMIRATES AIRLINE: BILLION-DOLLAR SUKUK-BOND ISSUE

1. Why is there a yield difference between the two issuance in these two different markets? Is this due to differences in risk, investor clienteles, liquidity, seniority, or something else?

2. Assume this price differential is due to differences in investor clienteles. Does this provide an opportunity that a hedge fund manager could exploit? If so, how exactly would they exploit this opportunity? If not, explain the market impediment or friction that prevents hedge fund managers from acting on these price differences.

3. Why were six different banks involved in this issuance? For simplicity, assume that the banks equally split the issuance. Should the banks' fees for their services differ between the sukuk bond and the straight bonds? If so, by how much and in which direction?

4. How should Emirates finance their next batch of planes? How about the batch of planes after that? Recommend a financing roadmap for Emirates Airline for their existing orders of A380 planes. Make sure to consider the maturity choice of the firm as well.

Reference no: EM132970036

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