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DIB takes USD 500 mn AT1 sukuk to the market: Dubai Islamic Bank (DIB) sold USD 500 mn worth of sukuk in additional tier 1 (AT1) sukuk, with an annual yield rate of 5.25%, according to a press release (pdf). The final price was narrowed to 5.25% from an initial guidance of 5.75% on the back of strong investor demand, with a reset spread of 133.4 bps over the US Treasury rate — the lowest for any AT1 issuance since the 2009 financial crisis.
The Sharia-compliant bonds are set to be listed on Nasdaq Dubai and Euronext Dublin, the statement said.
Typical of an AT1 issuance, the funds will boost the lender’s capital adequacy ratio, the statement added.
The issuance is DIB’s second this year: The emirate’s largest Islamic bank sold its five-year, USD 1 bn sustainable sukuk in February, receiving USD 2.5 bn worth of orders. DIB achieved its lowest credit spread on the sustainable sukuk, tightening pricing to 95 bps over US treasuries after seeing strong demand from investors. The sukuk was part of its USD 7.5 bn trust certificate issuance program.
Investors 💗local banks’ AT1 issuances: Our friends at Mashreq issued a USD 500 mn additional Tier 1 bond in June, with an annual coupon rate of 7.125%, with a 270.5+ basis point (bps) reset margin — the lowest coupon for AT1 bonds set by a bank in the UAE in the past three years.
ADVISORS- DIB appointed Al Rajhi Capital, DIB, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, Sharjah Islamic Bank, and Standard Chartered Bank as joint lead managers and joint bookrunners.
