NBAD Issues 500 Million Malaysian Ringgit Sukuk
The National Bank of Abu Dhabi (NBAD), the Number One Bank in the UAE, has successfully issued its second ever Sukuk (Islamic bonds) in Malaysia.
The bond issue was for 500 million ringgit (US$160 million or AED 587.68 million) and was issued under NBAD's MYR Medium Term Notes (MTN) 3 billion programme. The offering received strong investor demand despite the challenging year-end timing and was more than two times oversubscribed, showing the underlying appetite of investors for NBAD's credit.
The 10-year Sukuk has a coupon of 4.9%. HSBC, Royal Bank of Scotland, and Malaysia's Maybank were the joint lead mangers (JLMs) for this transaction.
The transaction has a strong distribution across a wide investor base with a breakdown of fund managers 33%, insurance companies 27%, financial institutions 10%, and other corporations 30%.
This 10-year issue, which comes six months after NBAD's first ever Sukuk issuance, reflects the commitment of NBAD to create a yield curve in MYR to meet the strong investor demand and fits in very well with the core strategy of diversifying the funding base and extending the liability maturity profile.
"We are delighted with the outcome. This is our second MYR issuance in one year, which confirms investors understanding and appreciation of NBAD's strong credit fundamentals and also confirm our flexibility to meet investors' demands. This issue fits in well with our medium term strategy of diversifying our funding sources," said Mahmood Al Aradi, the Senior General Manager of NBAD's Financial Markets Division.
NBAD's Sukuk issuance is a specifically-designed format of financing that meets the strict investment guidelines of some of the Islamic asset managers and pension funds based in Malaysia and Asia.
"We managed to secure a very healthy order book in excess of MYR 1 billion, which is remarkable considering the fact that many investors were already closed for the year and this was a 10-year issue," said Stephen Jordan, the General Manager of Liquidity Management and Interest Rates Products Group at NBAD.
This issuance confirms what NBAD predicted last June when Mr. Al Aradi said: "We believe this will now open the door for other issuers from our part of the world to tap this unique liquidity pool and strengthen further the links that have been established with the Asian investor base."
Since then, GCC corporations have tapped the Sukuk market in Malaysia and Asia.
Following the second issuance, Mr. Al Aradi commented: "We were very proud to lead GCC FI bond issuance in 2010 with our $750 million 5-year issue in March, and we now believe we have likely closed the year's last GCC FI deal after a very eventful year."
- Twist of fate: Middle East fund managers shy away from Turkey, warm up to Egypt
- 'Let them eat cake'...or in the case of Egyptians, shall we say 'pasta'?
- In flux: What's up with Dubai's stock market?!
- GCC banks could face capital and liquidity shortfall
- It's time for an interest rate war in emerging markets, and here's why Middle Eastern economies should take part