First Abu Dhabi Bank raises $500m through Islamic bond

The latest deal is the first global sukuk issuance in 2023, the lender 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
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First Abu Dhabi Bank, the UAE’s largest lender by assets, has raised $500 million through a sukuk or Islamic bond, marking the first global sukuk issuance in 2023.

The five-year sukuk was priced at 90 basis points over the US treasury rate which is the equivalent of a profit rate of 4.58 per cent and is listed on the London Stock Exchange, the lender said in a statement on Tuesday.

“While this issuance is catered predominantly to our Islamic investors, it also refreshes our pricing benchmark for our private placements and issuances in other markets,” Rula AlQadi, group treasurer at FAB, said.

“I would like to thank our investors and partners for the trust placed in FAB which helped us price inside our conventional curve ― a fantastic result, especially after a very tumultuous 2022 for fixed income.”

FAB also acted as joint lead manager on this sukuk issuance, the statement said.

Global sukuk issuance is projected to grow at a compound annual growth rate of 6.8 per cent over the next five years, despite declining last year due to a global monetary tightening cycle, according to a new report by Refinitiv in September.

Sukuk issuance is projected to reach $257 billion in 2027, with nearly 41 per cent of respondents in a Refinitiv survey saying they were still bullish about growth in sukuk supply.

Global sukuk issuance reached $100.9 billion in the first half of 2022, marginally lower than $104.2 billion in the same period the previous year.

“Our wholesale funding will be driven by the diversity of investor base and cost-efficient markets and the sukuk market is especially important for us in this regard,” Ms AlQadi said.

First Abu Dhabi Bank reported a 19 per cent rise in its net income for the first nine months of the year as its core business improved significantly amid a rise in interest income and a fall in provisions for bad loans.

Net profit attributable to shareholders in the period to the end of September surged to about Dh11 billion ($3 billion), the lender said in October.

FAB, which was created in 2016 with the merger of National Bank of Abu Dhabi and First Gulf Bank, has expanded beyond the UAE market.

Last year it completed the merger of Bank Audi Egypt with its Egyptian operations, consolidating its market position in the most populous Arab country.

Dubai Islamic Bank, the UAE’s biggest Sharia-compliant lender by assets, has also raised $750 million through the sale of its debut sustainable sukuk as it diversifies its financing base, it said in November.

Updated: January 11, 2023, 3:20 AM