FAB raises $500 mn through sukuk priced at 1.41 pc; issue oversubscribed three times

BBN Report

More banks in queue to cash in on record low price

ABU DHABI, January 11-2021: First Abu Dhabi Bank (FAB) has claimed the lowest-ever yield by any bank in the MENA region when it priced a five-year $500 million Sukuk at an effective rate of 1.411 per cent.

Last week, Emirates NBD also raised $750 million through a bond issue. According to banking circles, more banks with good credit rating will enter the debt market to raise funds in order to cash in on one of the lowest-ever prices available in the market.

The UAE’s largest bank and one of the world’s largest and safest financial institutions, FAB, succeeded in pricing the issue at mid-swap plus 90 basis points (MS+90bps all-in yield of 1.411 per cent) through the FAB Sukuk Company Ltd.

First sukuk issue in FY21

The deal is FAB’s first US dollar benchmark offering and the first Sukuk issue globally in 2021. This offering was highly successful attracting a total order book of approximately $1.5 billion, which represents a three times over-subscription rate.

The deal also attracted high quality Islamic and conventional investors from the Middle East, Asia, UK and Europe. Pricing on the deal at MS+90bps represents a negative new issue premium when compared with FAB’s January 2025 maturity Sukuk which was trading at MS +104bps on day of deal announcement.

Majority investors from overseas

This resulted in FAB printing the lowest-ever yielding five-year US dollar bank paper from MENA. The Sukuk was placed to a diversified investor base of which 53 per cent was international and 47 per cent was regional.

The placement to Islamic investors was 76 per cent signifying FAB’s appeal to Sharia-compliant liquidity pools globally. Rula Al Qadi, Managing Director & Head of Group Funding at FAB said, “Coming in the first week of January, we managed to take advantage of market conditions and print a deal roughly 20 bps inside our curve.”

Al Qadi said the bank got tremendous support from investors globally – both Islamic and conventional – which is testament to FAB’s strong credit fundamentals and the overall positive view of Abu Dhabi and the UAE economy by international investors.

 

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