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Dubai Islamic eyes bond sale for Tamweel unit

Dubai Islamic Bank (DIB) and its mortgage unit Tamweel plan to hold fixed income roadshows beginning in Asia, followed by the United Arab Emirates and Europe, eyeing a potential bond sale for the unit guaranteed by the bank.

November 30, 2011 12:13 by

The roadshow will kick off in Kuala Lumpur on Thursday, with meetings in Singapore on Friday, the UAE on Sunday and London on Monday, a lead arranger told Reuters.

DIB mandated Citibank, Standard Chartered and itself to arrange the investor meetings, the lender said in a statement on Wednesday.

Despite the flood of bond issuances in the Gulf, particularly sukuk or Islamic bonds, there is likely to be demand for Tamweel debt, especially with a guarantee from DIB, said Ahmad Alanani, senior executive officer of investment firm Exotix in Dubai.

“Without that guarantee, it would fall into high yield space,” he said. “There’s definitely improved sentiment regarding Tamweel since DIB effectively took it over.”

DIB, the UAE’s third-largest bank by market value, raised its stake in Tamweel to 57.33 percent in 2010, effectively rendering the mortgage lender a subsidiary of the bank.

Islamic mortgage lender Tamweel and its rival Amlak ran into trouble after the collapse of Dubai’s real estate sector in 2008. The companies, which halted trading, were expected to merge but DIB’s move effectively scrapped the merger.

Tamweel, whose shares resumed trading in May, will issue a $300-$500 million sukuk in the fourth quarter, its acting chief executive said in September.

Islamic bond issues, which have outpaced the conventional bond industry in recent months, should continue to show strength into the first quarter of 2012 as borrowers seek better pricing and alternative funding amid the global debt crisis.

Tamweel shares were trading up 2.2 percent on the Dubai bourse at 0930 GMT. DIB shares rose 0.5 percent in Dubai. (By Shaheen Pasha and David French; Editing by Dinesh Nair and Helen Massy-Beresford)

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