Abu Dhabi's FAB raises Dh1.8bn through Chinese yuan formosa bond

The issue is the largest denominated in Chinese yuan globally, FAB says

Abu Dhabi, United Arab Emirates - February 7th, 2018: FAB (First Abu Dhabi Bank) Head office - Business Park. Wednesday, February 7th, 2018. Twofour54, Abu Dhabi. Chris Whiteoak / The National

First Abu Dhabi Bank, the UAE’s largest lender by assets, has raised 3.6 billion Chinese yuan (Dh1.8bn) through the sale of a five-year formosa bond.

The issue is the largest denominated in Chinese yuan globally, FAB said in a statement on Tuesday. Formosa deals refer to bonds issued in Taiwan by foreign borrowers, but are denominated in currencies other than the Taiwanese dollar.

The lender said it had upsized the issuance from 3.25bn Chinese yuan to 3.6bn Chinese yuan.

“The deal exceeded our expectations in terms of size and reflects Asian investors’ strong faith in FAB’s credit fundamentals and Abu Dhabi’s economic strength,” said Rula Al Qadi, head of group funding at FAB.

“Our ability to access niche markets at short notice and to take advantage of opportunistic funding levels gives us a major advantage in funding.”

FAB’s latest debt deal comes after it issued a Dh1.4bn formosa bond in June, which was the largest formosa bond in the Middle East and North Africa at the time of issuance.

Gulf lenders, including FAB, have been actively tapping the bond markets this year to take advantage of lower interest rate globally amid the Covid-19 pandemic.

In February, FAB said it raised Dh3bn in two separate bond issuances over three days.

The lender sold a three-year, £450m (Dh2.15bn) bond, which was the first and largest issuance in sterling from a financial institution in the Middle East, as well as a A$350m (Dh860m) five-year Kangaroo bond, its first in Australia since 2014.

The bank also issued a $500m sukuk earlier this year, for which the order book topped $1bn.

FAB, formed in 2017 through the merger of National Bank of Abu Dhabi and First Gulf Bank, reported a 25 per cent drop in its second quarter net income, dragged down by a rise in provisions amid the pandemic-driven economic slowdown.