HBME sells dirham bonds worth $616.5m

HSBC Bank Middle East (HBME) said it sold Dh2.25 billion ($616.5 million) worth of bond, which was the largest conventional dirham bond to sold by any bank, a press statement said.

HBME is a wholly owned subsidiary of HSBC Holdings, and is the group's operating company in the Middle East and Pakistan.

HBME is rated Aa2 by Moody's and AA- by Fitch.

The five-year floating rate notes were priced at 70 basis points above the six-month Emirates Interbank Offered Rate (Eibor).

Neil Foster, HSBC's Middle East head of Global Markets, said: "We have obtained a highly competitive price for this issue, especially considering the volatility and uncertainty in today's markets. This is testament to the excellent performance and strong prospects for HSBC across the Middle East."

The bank said demand was strong and the credit was taken up by investors in Asia and Europe, as well as from the Middle East.

The bonds' dirham denomination highlights investor appetite for Gulf Arab securities in local currencies, on expectations they may be allowed to strengthen to stave off rising inflation, increasing the value of future bond returns.

All Gulf currencies, except for Kuwait's, are pegged to the falling US dollar. (With inputs from Reuters)