Emirates NBD unlikely to issue bonds in first half

(SATISH KUMAR)

Emirates NBD, the largest GCC bank in terms of assets, is unlikely to issue bonds during the first half, a senior official said.

Talking to Emirates Business, Tony Bush, Managing Director Global Funding, Global Markets and Treasury, Emirates NBD, said the bank does not need to raise funds through bond issue immediately. Whether Emirates NBD will tap funds through bond issues during the first half, Bush said: "We don't need to do that. We have confidence in our depositors that they will bring the funds we need."

Bush acknowledged there are two bonds, each sized at $750 million (Dh2.75 billion), maturing in the first quarter and the fourth quarter of the current year. "The total value of bonds maturing during the current year will be not less than Dh7bn," he added.

During the last quarter of 2009, Rick Pudner, the Chief Executive of Emirates NBD had said the bank would consider raising funds through bonds in the first quarter of 2010 itself.

In the last few weeks, Dubai Water and Electricity Authority (Dewa) and ETA Star put on hold their bond plans. According to analysts, the market is unlikely to see any bond issues coming from Dubai entities in the next few months. "I am afraid whether this would happen any time near," said a Dubai-based analyst. "The market is very tight. I have not heard anyone talking about issuing bonds during the first quarter," said Abbas Hassan, head of Investment Banking, Mashreqbank.

According to most analysts Emirates Business talked to, banks have slowed down on their lending, be it wholesale or retail. "I don't think banks will resume the full-scale lending until clarity on when they can raise funds is seen. Though the deposits inflow is there, most banks are reluctant to lend," said Deepak Tolani, a banking analyst at Al Mal Capital.

On the one hand there is no appetite for bonds and on the other there cannot be a viable pricing that can be arrived at for a bond issue currently, according to fixed income experts.

Though there were announcements in June that there would be a federal bond guarantee scheme in place, it is heard that the modalities are still being worked on that. "An explicit guarantee from the government can have an impact in the UAE's bond market," added Tolani.

 

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