Abu Dhabi’s FAB issues 1.5bn Chinese yuan formosa bond

Order was increased in size by 50% and priced at lowest coupon the lender has paid in the currency

DUBAI, UNITED ARAB EMIRATES - May 15 2019.

First Abu Dhabi Bank in Um Suqeim

(Photo by Reem Mohammed/The National)

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First Abu Dhabi Bank, the UAE’s largest lender by assets, raised 1.5 billion Chinese yuan ($232 million) through the sale of a five-year formosa bond.

The bond was issued at a coupon rate of 3.15 per cent, which is the lowest coupon ever paid by a Middle East bank for debt issued with a five-year tenor, the lender said in a statement on Tuesday.

Formosa bonds refer to debt issued in Taiwan by foreign borrowers in currencies other than the Taiwanese dollar.

“FAB has always been very well received in the formosa market whether issuing in [yuan or dollars] and we tend to be a frequent issuer in this market as a commitment to the Taiwanese and broader Asian investors,” Rula Al Qadi, managing director and head of group funding at FAB, said.

The offer was upsized to 1.5bn yuan from a target size of 1bn yuan with the majority of investors being onshore Taiwanese and Asian investors including life insurers, banks, fund managers and securities houses, the lender said.

The bank also raised 3.6bn Chinese yuan through the sale of a five-year formosa bond in August.

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

FAB announced on Monday that it had raised $500m through a five-year sukuk, also at a record-low coupon rate.

With total assets of Dh955bn as of September 2020, FAB has an Aa3 long-term debt rating from Moody’s Investors Service and an AA- rating from Fitch Ratings and S&P Global.

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