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- Dubai 05:24 06:42 12:10 15:09 17:32 18:50
Dubai Islamic Bank (DIB) said on Tuesday it has picked eight banks to arrange roadshows from January 8 for a potential benchmark size dollar-denominated sukuk issue which will boost the bank's capital reserves.
If the sale goes ahead after the investor meetings, DIB will likely be the first bond deal from the Gulf region in 2015, after a lull in issuance for over a month as the plunging oil price soured market sentiment in the region, sending share prices lower and spreads on existing bonds wider.
Oil and gas production account for nearly half of economic output in the six Gulf Cooperation Council nations, some three-quarters of exports, and an even higher ratio of state revenues.
DIB, the largest Islamic bank in the United Arab Emirates, has mandated HSBC and Standard Chartered as the joint structuring banks for the potential issue.
Those two, as well as Al Hilal Bank, Emirates NBD, National Bank of Abu Dhabi, Noor Bank, Sharjah Islamic Bank and its own investment banking team, will arrange the roadshows, it said in a statement.
The investor meetings will be held in Asia, the Middle East, and Europe and a sukuk transaction which enhances its Tier 1, or core, capital may follow subject to market conditions. The possible sukuk will have a perpetual tenor, it added.
In October, DIB Chief Executive Adnan Chilwan said the bank will need to bolster its capital reserves to sustain its growth pace, as the local economy booms and lending increases.
DIB posted a 55.7 per cent rise in third-quarter net profit, helped by a jump in income from Islamic financing, as well as fees, commissions and foreign exchange.
At the end of the third quarter, DIB's total capital adequacy ratio – a key indicator of the bank's health which includes both Tier 1 and Tier 2, or supplementary, capital – was 15.2 per cent. That compares with the minimum 12 per cent set down by the UAE central bank but down from 18.2 per cent at the start of 2014.
DIB last issued a capital-boosting sukuk in September 2013. That $1 billion Tier 1 Islamic bond, originally sold with a 6.25 per cent coupon, was trading at 0650 GMT to yield an equivalent of 5.772 per cent on the bid side, according to Thomson Reuters data.
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