UAE’s First Abu Dhabi Bank set to sell $500 million sukuk

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First Abu Dhabi Bank (FAB), the United Arab Emirates’ largest lender, is set to sell $500 million in sukuk, a Sharia-compliant bond, at 75 basis points over US Treasuries, bank documents showed.

The spread on the sukuk was tightened from initial price guidance of around 85 basis points over UST after FAB drew around $1.4 billion in orders excluding interest from joint lead managers, the documents showed.

The deal is expected to launch later on Wednesday.

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Bond sales out of the Gulf have been slow this year as issuers wait out debt markets rattled by a more hawkish US Federal Reserve expected to begin an aggressive tightening cycle next month, while political tensions over Ukraine further cloud the outlook.

Gulf issuance volumes were already expected to be subdued this year as high oil prices reduce government funding needs.

Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, KFH Capital, Saudi National Bank, Sharjah Islamic Bank, Standard Chartered and The Islamic Corporation for the Development of the Private Sector are arranging FAB’s sukuk sale.

The sale will mark only the third international issuance out of the Gulf this month, all by banks.

Dubai Islamic Bank and Riyad Bank raised $750 million each with senior unsecured and sustainability-linked Additional Tier 1 sukuk, respectively.

January also saw only three dollar-denominated Gulf bond sales.

Boubyan Bank on Wednesday hired banks to sell five-year senior unsecured sukuk too, while Abu Dhabi National Oil Company has set up a new debt-issuing entity that it said will tap the market for $3 to five billion a year.

Also in the pipeline is a sale of an $800 million green perpetual sukuk from Bahrain’s Infracorp.

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