Dubai Islamic Bank closes $1bn sukuk

The Islamic bond attracted more than 170 investors with the order book rising to over $4.5bn

Dubai Islamic Bank on Wednesday said it successfully closed $1bn sukuk. Chris Whiteoak / The National

Dubai Islamic Bank (DIB), the largest Sharia-compliant lender in the UAE, closed a $1 billion (Dh3.67bn) 5-year sukuk with a profit rate of 2.95 per cent despite a challenging global environment due to the coronavirus pandemic.

The sukuk attracted more than 170 investors with the order book rising to over $4.5bn, the lender said in a statement on Wednesday.

“With the issuance being subscribed nearly 4.5 times, DIB continues to remain an attractive credit in the capital market space,” Adnan Chilwan, group chief executive of DIB said. “This transaction is a clear testament to the confidence the global markets place in the bank’s robust fundamentals, as well as investor comfort in the broader Dubai and UAE economy.”

The sukuk was issued as a drawdown under DIB’s $7.5bn Trust Certificate Issuance Programme, which is listed on Euronext Dublin and Nasdaq Dubai.

It is the first public benchmark sukuk issuance from a regional financial institution after the Covid-19 outbreak.

Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, ICBC, The Islamic Corporation for the Development of the Private Sector, KFH Capital, Sharjah Islamic Bank and Standard Chartered Bank acted as joint lead managers and bookrunners on this transaction.

DIB's first quarter profit slid 18 per cent as impairment charges and operating expenses rose amid the coronavirus pandemic.

Net profit attributable to owners of the bank for the three months ending March 31 declined to Dh1.11bn, the bank said in April. Impairment charges climbed to Dh1.48bn for the reporting period, up from Dh347 million recorded at the end of March 2019. Operating expenses rose 40 per cent year-on-year to Dh839m during the period.

Earlier this year, the Dubai-based lender completed its acquisition of rival Noor Bank to create one of the largest Islamic banks in the world, with more than Dh275bn in assets.