Dubai Islamic Bank successfully prices $1bn sustainable sukuk, its second so far

Dubai Islamic Bank (DIB) has successfully priced its second sustainable sukuk – a $1bn 5.5-year senior issue with a profit rate of 4.80 per cent per annum, representing a spread of 102.4 basis points (bps) over five-year US Treasuries.

In November last year, DIB priced its inaugural sustainable sukuk, a $750m five-year senior issue with a profit rate of 5.493 per cent per annum, reflecting a spread of 155bps over five-year US Treasuries.

The transaction marked the first-ever sustainable sukuk from a UAE financial institution and the largest issue size ($750m) in the international capital markets from a GCC bank since February 2022.

The book was 2.3x oversubscribed.

Read: Dubai Islamic Bank prices $750m inaugural sustainable sukuk

Second sustainable sukuk

The sukuk was issued in line with DIB’s sustainable finance framework which was created to facilitate financing of green and social initiatives and projects.

It was priced after completing a comprehensive marketing exercise where DIB updated investors on its positive financial performance as well as its Sustainable Finance Framework.

The response from investors was overwhelming and despite issuing a larger size ($1bn), the sukuk was 3x oversubscribed, which itself was the largest book size seen for a GCC bank in over a year.

Dr Adnan Chilwan, group CEO, DIB, commented: “Driven by our detailed and meticulously crafted balanced growth strategy as well as the bank’s commitment towards the Sustainability agenda of the UAE and the larger ‘Net Zero by 2050’ goal of the nation, we are delighted to announce the issuance of our second sustainable sukuk, the largest-ever by a Middle East Financial Institution.

“The investor response for this latest issuance was overwhelming with more than $3bn of orders allowing us to issue a larger size well within our pricing parameters. I would like to thank our investors for the continued trust and confidence placed in DIB. As the country prepares to host COP 28, we remain committed to play an active role in fulfilling the UAE’s long-term sustainability objectives. We hope the success of our offering will encourage other issuers from the UAE to follow suit in this format.”

Delighted to announce our second Sustainable Sukuk, a landmark issuance of USD 1Bn by @DIBtoday. Oversubscribed by 3X, this is a strong testament of our drive towards Sustainability & our commitment to UAE’s Net Zero agenda & Dubai Clean Energy Strategy. https://t.co/yB4ibrf9ck pic.twitter.com/Xdnw8fVp6U

— Dr. Adnan Chilwan (@AdnanChilwan) February 13, 2023

The sukuk is issued under ‘DIB Sukuk’ and is listed on Euronext Dublin and NASDAQ Dubai.

Standard Chartered Bank acted as ‘Sole Sustainability Structurer’ while Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital, Mashreq, Sharjah Islamic Bank, Standard Chartered Bank and The Islamic Corporation for the Development of the Private Sector acted as joint lead managers and bookrunners on the transaction.