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ADCB eyes Benchmark Islamic bond

Abu Dhabi Commercial Bank's Islamic bond could launch this week; No roadshows planned ahead of Islamic bond issue - lead; ADCB is second Abu Dhabi lender eyeing sukuk currently

November 14, 2011 1:39 by



Abu Dhabi Commercial Bank has picked four banks for a potential Islamic bond, or sukuk, which could be launched this week, making it the second lender from the emirate currently eyeing a chunk of Islamic liquidity amid dicey global markets.

ADCB has picked itself as well as Bank of America, J.P. Morgan Chase and Standard Chartered as joint lead arrangers and bookrunners for a debut dollar-denominated sukuk, a document from arranging banks showed on Monday.

The sukuk is “expected to be launched during the week of 14th November subject to market conditions,” the document said.

Last week, Abu Dhabi Islamic Bank announced a series of roadshows kicking off in Kuala Lumpur on Nov. 17 and ending in London on Nov. 21.

ADCB is not planning any formal roadshows ahead of a potential sukuk issue, a source at an arranging bank told Reuters.

The bank has not issued an Islamic bond previously, but is a name familiar to investors inMalaysia, one of the world’s biggest Islamic finance markets, after it issued a 750 million ringgit conventional bond last year.

“It appears markets have come to the conclusion that the sukuk format is a better way forward for many local issuers looking to raise money,” said Nick Stadtmiller, fixed income analyst at Emirates NBD.

“Islamic institutions still have cash to deploy, and demand for Islamic-compliant assets still looks fairly strong.”
The sukuk market has also proved more resilient due to the profile of investors, who tend to hold the bonds to maturity, reducing the chance of big swings in secondary market prices triggered by shorter-term speculators bailing out of positions.

A note from Standard & Poor’s earlier this week rating the proposed notes said that ADCB was eyeing a five-year $750 million sukuk issue.

ADCB’s third-quarter net profit nearly doubled, beating analyst forecasts. Its shares are up over 40 percent this year.

The bank has a 500 million pound bond maturity due on Nov. 16, according to Thomson Reuters data, although the bank has the resources to meet this and the sukuk is more about taking advantage of an opportunity to print, the source at the arranger said. (Reporting by Rachna Uppal and David French, Additional reporting by Mala Pancholia, Editing by Dinesh Nair)



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