Abu Dhabi Islamic Bank hires banks for $750m sukuk

Potential issuers in the region have held back their plans because of market volatility



Abu Dhabi Islamic Bank (ADIB), the largest sharia-compliant lender in Abu Dhabi, has hired international banks to arrange the sale of $750m in Islamic bonds, three sources familiar with the matter said.

ADIB’s debt sale, which still needs final approval by the bank’s shareholders, would follow months of subdued activity in the Middle East primary bond market, as potential issuers in the region have held back their plans because of market volatility and the price premium they might have to pay to attract demand.

HSBC and JPMorgan have been hired as coordinators for the sukuk deal, said one of the sources, while other banks will join the transaction at a later stage.

ADIB, HSBC and JPMorgan declined to comment.

ADIB’s shareholders will vote on Aug. 19 on the planned transaction, a $750m perpetual Tier 1 sukuk, and on the proposed repayment of an outstanding $1bn perpetual sukuk issued in 2012.

Perpetual bonds mimic some of the characteristics of equity because they lack a maturity date.

The bank’s board is also proposing to raise capital through a Dhs1bn ($272.27m) rights issue.

Prior to the $1bn sukuk issued in 2012, ADIB had issued two five-year sukuk of $750m and $500m in 2010 and 2011. It repaid both the obligations without refinancing them.

ADIB reported last month a net profit of Dhs572.7m in the second quarter of this year against Dhs551.6m last year. Customer deposits amounted to Dhs101.2bn at the end of June.