UAE’s First Abu Dhabi Bank issues five-year $500m sukuk

UAE’s First Abu Dhabi Bank (FAB), Abu Dhabi’s biggest lender, has issued a $500m five-year sukuk, which is the lowest-ever yield on any five-year MENA bank USD issuance, issued at MS+90bps (all-in yield of 1.411 per cent) through FAB Sukuk Company Limited.

The deal is FAB’s first USD benchmark offering and the first sukuk issue globally in 2021.

It attracted a total orderbook of around $1.5bn which represents a three times over-subscription rate.
It received interest from Islamic and conventional investors from the Middle East, Asia, UK and Europe, reported news agency WAM.

While 53 per cent of its investor base were international investors, there were 47 per cent investors who were based within the region.

Furthermore, Islamic investors accounted for 76 per cent of the overall number of investors, signifying FAB’s appeal to Sharia-compliant liquidity pools.

“We are very pleased with the outcome of our sukuk issue. Coming in the first week of January, we managed to take advantage of market conditions and print a deal roughly 20bps inside our curve. Once again, we had tremendous support from investors globally – both Islamic and conventional – which is testament to FAB’s strong credit fundamentals and the overall positive view of Abu Dhabi and the UAE economy by international investors,” said Rula Al Qadi, managing director and head of Group Funding at FAB.

Pricing on the deal at MS+90bps represents a negative new issue premium when compared to FAB’s January 2025 maturity Sukuk, which was trading at MS +104bps the day the deal was announced.

This resulted in FAB printing the lowest-ever yielding five-year USD bank paper from MENA.

Another major bank in the UAE, Emirates NBD too, issued a $750m ‘senior’ bond with a five-year tenor last week, in the Middle East’s first dollar bond sale for 2021.