Emirates Islamic has successfully priced its first sukuk in AED 1B. The bank’s issuance of sukuk will increase the financing choices available to UAE businesses with Sharia’a-compliant requirements while promoting the growth of the medium-term dirham yield curve.
Strong demand led to 2.5 times increase in oversubscription for the three-year issuance. The bank was able to reduce the profit rate to 5.05 percent, at a spread of 67 basis points over UAE government treasuries, thanks to a robust order book that exceeded AED 2.5B. Following the development of the Ministry of Finance’s medium-term dirham yield curve, the sukuk sale shows the bank’s focus on extending the liquidity of the local currency sukuk market.
The sale of AED 1B in bonds by Emirate NBD was followed by the debut of the sukuk. Strong demand helped the bank reduce the price to an 83 bps (basis points) spread over UAE Government Treasuries for the three-year bond, the first of its kind to be issued by a UAE bank. Salah Amin, chief executive officer of Emirates Islamic said: “Emirates Islamic’s benchmark dirham sukuk further underscores the dirham bond market’s role as a significant and competitively priced source of funding for corporates.
“The robust demand is also a strong vote of confidence from global Sharia’a-compliant investors and demonstrates the strong appetite for dirham-denominated fixed-income products and services. Emirates Islamic is proud to play an important role in reinforcing the UAE’s position as the financial center of the region and supporting government initiatives.”
Mohammad Kamran Wajid, Deputy CEO of Emirates Islamic added: “Encouraged by the successful and heavily oversubscribed dirham bond issuance by Emirates NBD, Emirates Islamic has taken the opportunity to tap the market for an attractively priced dirham sukuk. The strong demand for the sukuk reflects the healthy appetite among Sharia’-compliant investors for a dirham-denominated issue. “At the same time, the sukuk’s strict adherence to the latest Sharia’a-compliant standards has allowed us to tap a deep pool of global liquidity and attract a wide range of investors. This milestone sukuk is fully aligned with the UAE government’s objective of developing the local debt market and the ‘Dubai: Capital of Islamic Economy Initiative’.”
