Dubai Islamic Bank, the largest Sharia-compliant lender in the UAE, has closed a $750 million (Dh2.75 billion) five-year sukuk, tapping into growing global interest in Islamic bonds.
Investor demand was “strong” with an order book that was more than 2.5 times oversubscribed, the lender said in a statement the Dubai Financial Market, where its shares are traded.
“Final pricing at 95 basis points over the 5 Year US Treasury represents the lowest-ever credit spread on any of our fixed-rate senior sukuk issuances an achievement all the more noteworthy given the current volatile state of markets,” said Adnan Chilwan, group chief executive of DIB.
The outcome of our issuance “is expected to set a precedent for other Islamic banks to follow”, ”, he added.
Global sukuk issuances rose by 36.1 per cent in 2021 to $252.3bn and are expected to continue growing this year on the back of robust Islamic investor appetite, a report by Fitch Ratings has said. Goals to diversify funding and Islamic finance development agendas are also boosting sukuk issuance in the region.
Several GCC companies issued Islamic bonds last year to secure funding while interest rates were low globally. Saudi Aramco, the world’s largest oil-exporting company, raised $6bn with a debut sukuk in June, while clean energy company Acwa Power raised $746m.
First Abu Dhabi Bank, the UAE’s biggest bank by assets, as well as Kuwait’s Warba Bank also secured $500m and $250m respectively through Islamic bonds.
Bank ABC, DIB, Emirates NBD Capital, First Abu Dhabi Bank, KFH Capital, HSBC, Sharjah Islamic Bank, Standard Chartered Bank and Islamic Corporation for the Development of the Private Sector acted as joint lead managers and bookrunners on the transaction.
DIB reported a 33 per cent jump in its 2021 net profit, driven by lower impairment charges and higher income from investment properties. Net profit attributable to owners of the bank for the full year surged to more than Dh4.39bn.
Impairment charges during the period fell 46 per cent to Dh2.44bn while income from investment properties more than doubled to Dh224.6m.—The National News
