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29 February 2024

FGB eyes benchmark sukuk

By Reuters

Abu Dhabi's First Gulf Bank (FGB) has picked four banks for a five-year benchmark-sized Islamic bond, or sukuk, three sources said on Tuesday, the latest Gulf institution planning to tap financing from sharia-compliant investors.

The four banks which have been mandated are Citi, HSBC, National Bank of Abu Dhabi and Standard Chartered, the sources, who declined to be named as the information has not yet made public, said.

"It will be a $500 million, five-year sukuk and if the deal is done, it will be without roadshows," one of the sources familiar with the matter told Reuters. "Investors know the story of First Gulf Bank and do not need to meet again with the bank's management."

No timeframe for the sukuk issue had been decided, two of the sources added, although one added that it hoped to be as soon as possible, depending on market conditions.

A benchmark-sized transaction is traditionally regarded as being worth $500 million or more.

FGB, 67 per cent owned by Abu Dhabi's ruling family, set up a $3.5 billion Islamic bond programme last July. It raised $650 million through a five-year sukuk sale in the same month.

FGB bonds were trading up from its par reoffer value in the secondary market at 103.135 at 1020 GMT, according to Thomson Reuters data, equivalent to a benchmark spread of 220 basis points over comparable U.S. Treasuries.

Emirates NBD's Islamic unit, Emirates Islamic Bank, is expected to print the first debt deal out of the Gulf later on Tuesday, having issued price talk for a five-year, benchmark-sized sukuk.

In the fourth quarter of 2011, Abu Dhabi Commercial Bank and Abu Dhabi Islamic Bank both tapped the sukuk market as they sought to circumvent volatile conditions in the conventional capital markets and take advantage of a favourable climate in the Islamic space.

FGB shares closed up 1 per cent on Tuesday.