FGB issues 5-yr USD 650 million Sukuk to expand its Islamic operations

First Gulf Bank, (FGB), the leading financial partner of choice in the UAE, has received excellent investor endorsement through a six times oversubscription of its USD 650 million Sukuk (Islamic bonds) issuance. The FGB Sukuk roadshow started on Thursday, 21st July 2011and invited Fixed Income investors from the UAE, Asia and Europe to participate. The book building exercise and the roadshow were closed on 26^th July. 

The final price for the five-year Sukuk was set at 200 basis points above midswaps. The Regulated S Bonds are listed in London and retain a fixed profit rate of 3.797 % p.a. Proceeds from the Sukuk are to be used for Islamic general corporate purposes and to fund the growth of the FGB’s Islamic loan book. 

Pleased with the success of its maiden Sukuk, Andre’ Sayegh, CEO of First Gulf Bank said: “As our focus is on providing sustainable returns to our shareholders through maintaining strong business fundamentals, the Sukuk will diversify our sources and maturities of funding, and expand our Islamic operations. We have received a massive endorsement from global investors and this will give us a firmer foothold for the future.  The overwhelming response we have received, clearly demonstrates the confidence that global investors have in the UAE economy in general and in FGB as a bank in particular.” 

The FGB 5-yr Sukuk was 6 times oversubscribed by more than 200 different investors worldwide. Of these investors, 46% were Middle East based, 24% were from Europe, 24% from Asia and 6% from the US and other markets. The transaction was divided between Banks (49%), Funds (39%), Retail (6%) and Insurance and Pensions (6%).   

FGB posted a net profit of AED 890 million ($ 242 million) in the second quarter (Q2) of 2011, representing an increase of 13% over Q2 2010 (AED 787 million). The bank maintained consistent positive growth in net profit for the fourth consecutive quarter with a growth of 1.7% over the previous quarter (Q1 2011).  Core banking revenue in Q2 at AED 1,550 million ($422 million) represented 97% of total income and was 11% higher than the same period of last year.