Mashreq Bank swiftly priced a US$500 million fixed five-year sukuk on Tuesday, moving ahead of its originally scheduled launch. The deal marked the first issuance from the CEEMEA region since the US tariff announcement on 2 April, with Mashreqbank’s strong credit ratings (A3/A/A) and solid standing in the UAE banking sector making it a natural choice to reopen the market.
The mandate was announced on Monday, with the transaction initially set for Wednesday following investor engagements in London. However, with favourable market conditions and solid interest, the arrangers opted to bring the deal forward.
Initial price guidance was set at 140 basis points over US Treasuries but tightened significantly to a final spread of 105 basis points due to overwhelming demand, with peak orders reaching US$2.8 billion. Despite the tighter pricing, the order book closed at a robust US$2.65 billion.
A lead banker stated the sukuk was priced at fair value, attracting both regional and international investors. “This reflects the healthy liquidity across the GCC, where investors are prepared to engage in primary markets with minimal or no new issue premium,” the banker noted.
The sukuk market, like certain sectors in Asia, benefits from consistent domestic investor demand. Mashreqbank’s decision to issue sukuk was viewed as a prudent move amid recent market volatility, with the asset class outperforming broader emerging market debt.
This was the bank’s first senior issuance since 2019, when it issued a conventional bond maturing in 2024. It previously tapped capital markets in June 2023 with a US$500 million perpetual non-call 5.5-year AT1, and twice in 2022 through AT1 and Tier 2 instruments.
