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Dubai’s Emirates NBD may issue bond, timing key

ENBD keeping bond options open; No decision on sukuk sale yet, timing key;Could confirm banks this week for possible issue; Co has issued $500M in 2011 in private placements

November 28, 2011 2:48 by

Emirates NBD, Dubai’s largest bank by assets, is considering a five-year, dollar-denominated bond, its chief executive said on Monday, adding the lender is waiting for the right timing for any eventual issue.

Emirates NBD is seen favouring an Islamic bond, or sukuk, and could mandate banks as early as this week, four banking sources had earlier told Reuters.

The sources, speaking on condition of anonymity, said ENBD has drawn up a shortlist of seven or eight banks from which it will select the institutions which will manage the sale.

This list includes National Bank of Abu Dhabi, Standard Chartered, HSBC, Citi, Royal Bank of Scotland and ENBD itself.

“We are looking at five-year but the size we are not sure. We will determine that by the next week or 2 weeks,” Chief Executive Rick Pudner told reporters on the sidelines of a company event. “We haven’t mandated any banks yet. It’s very much a case of looking at the opportunities.

“There were quite a few issues recently so we have decided to wait a little bit and see what the right timing is for going into the market.”

Both conventional and Islamic institutions, as well as global sovereigns such as Bahrain and Indonesia, have been flocking to the sukuk market recently, creating an unusually active fourth quarter.

Emirates NBD has issued around $500 million in privately-placed paper so far in 2011, with all of it sold to European investors, a Gulf-based banking source said.

One of the largest, with an issue date of Nov. 3, was a $163 million two-year bond which priced at 140 basis points over the three-month London interbank offered rate with a 1.832 percent coupon through sole bookrunner Commerzbank.

The quarterly putable bond, which means investors can ask for the cash to be repaid every three months, achieved a good price in the volatile environment, a separate banker said.

In May, Emirates NBD, which has about $2.18 billion in debt maturities in 2012, completed a debt swap for two existing notes due to expire in 2016 for longer-term debt. It has repeatedly said it would not overpay for issuing new debt, and pricing levels so far this year had been too expensive.

When asked about sanctions on Syria by the Arab league, Pudner said: “We haven’t seen any guidance yet. May be we will get some in the near future.”

The Arab League approved unprecedented economic sanctions against Syria, isolating President Bashar al-Assad’s government over its eight-month crackdown on protests against his rule.

The sanctions include a travel ban on top Syrian officials, a freeze on assets related to Assad’s government and are aimed at halting dealings with Syria’s central bank and investment in the country.

Emirates NBD shares were flat on the Dubai bourse on Monday but are up nearly 20 percent this year. (By David French)

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