Dubai's DIB raises $750m from debut sustainable sukuk issue

The five-year deal priced at 5.493% per annum was 2.3 times oversubscribed

Dubai Islamic Bank said its inaugural sustainable finance issue was the largest by a GCC bank since February. Photo: Dubai Islamic Bank
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Dubai Islamic Bank, the UAE’s biggest Sharia-compliant lender by assets, has raised $750 million through the sale of its debut sustainable sukuk as it diversifies its financing base.

DIB priced the five-year Islamic bond at a profit rate of 5.493 per cent per annum, representing a spread of 155 basis points over five-year US Treasuries, DIB said in a filing to the Dubai Financial Market, where its shares are traded.

The deal was the largest transaction by a GCC bank since February this year and was 2.3 times oversubscribed.

The issue is part of the bank’s Sustainable Finance Framework, which is aimed at arranging funding for green and social initiatives projects.

“This deal was very important for DIB, given our strong commitment to sustainable finance and the UAE’s net-zero agenda and the Dubai Clean Energy Strategy,” group chief executive Adnan Chilwan said.

“I was particularly pleased with the investor response, which enabled us to issue a larger size [sukuk] well within our pricing parameters, and the success of this transaction continues to highlight the confidence investors place in DIB.”

Sustainable finance deals fund environment, social and governance-focused projects that contribute to sustainable development.

Sovereigns, government-related entities and corporates are increasingly looking at tapping into the sustainable finance market to pursue their social agenda and their net-zero goals.

The global sustainable finance market was valued at $3.65 trillion in 2021 and is projected to reach $22.48 trillion by 2031, growing at a compound annual rate of more than 20 per cent between 2022 to 2031, according to Allied Market Research.

The value of global green bonds — issues that particularly focus on climate-related projects — hit $479 billion from more than 1,000 issues in 2021, a growth of 96 per cent compared with 2020 and a record high.

The green bonds market has sustained the growth trend over the past several years, rising from only $63 billion in size in 2016, according to data from Refinitiv.

DIB’s inaugural sustainable finance issue is listed on Euronext Dublin and Nasdaq Dubai.

Standard Chartered acted as sole sustainability structurer while banks such as DIB, Emirates NBD Capital, First Abu Dhabi Bank and HSBC acted as joint lead managers and bookrunners on the transaction.

Updated: November 23, 2022, 7:24 AM
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