UAE’s Emirates Islamic issues dirham-denominated sukuk valued at Dhs1bn

Emirates Islamic has successfully priced its inaugural Dhs1bn dirham-denominated sukuk.

The bank’s sukuk sale will expand financing options for UAE corporations with Sharia’a-compliant needs while enhancing the development of the medium-term dirham yield curve.

The three-year issue saw strong demand and was oversubscribed 2.5 times. The strong order book, which crossed Dhs2.5bn, enabled the bank to tighten the profit rate to 5.05 per cent, at a spread of 67 basis points over UAE government treasuries.

The sukuk sale demonstrates the bank’s focus on deepening the liquidity of the local currency sukuk market following the creation of the Ministry of Finance’s medium-term dirham yield curve.

The launch of the sukuk follows Emirate NBD’s Dhs1bn bond sale in January. The three-year bond – the first such issue by a UAE bank – saw strong demand with the order book peaking at over 1.65 billion, enabling the bank to tighten the price to a spread of 83 bps (basis points) over UAE Government Treasuries.

Read: Dubai’s Emirates NBD successfully issues three-year Dhs1bn bond

Emirates Islamic supports government initiatives

Salah Amin, chief executive officer of Emirates Islamic said: “Emirates Islamic’s benchmark dirham sukuk further underscores the dirham bond market’s role as a significant and competitively priced source of funding for corporates.

“The robust demand is also a strong vote of confidence from global Sharia’a-compliant investors and demonstrates the strong appetite for dirham-denominated fixed-income products and services. Emirates Islamic is proud to play an important role in reinforcing the UAE’s position as the financial center of the region and supporting government initiatives.”

Mohammad Kamran Wajid, Deputy CEO of Emirates Islamic added: “Encouraged by the successful and heavily oversubscribed dirham bond issuance by Emirates NBD, Emirates Islamic has taken the opportunity to tap the market for an attractively priced dirham sukuk. The strong demand for the sukuk reflects the healthy appetite among Sharia’-compliant investors for a dirham-denominated issue.

“At the same time, the sukuk’s strict adherence to the latest Sharia’a-compliant standards has allowed us to tap a deep pool of global liquidity and attract a wide range of investors. This milestone sukuk is fully aligned with the UAE government’s objective of developing the local debt market and the ‘Dubai: Capital of Islamic Economy Initiative’.”

Emirates NBD Capital was the sole global coordinator, and Dubai Islamic Bank, First Abu Dhabi Bank and Standard Chartered Bank were joint lead managers and joint bookrunners for the sukuk.