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Emirates Islamic Eyes Benchmark Sukuk, Parent To Back Bond

Sukuk issue dependent on market conditions – source; Issue fully backed by parent ENBD – document; Roadshows start Jan. 5, end in London

January 3, 2012 3:56 by

Emirates Islamic Bank, a unit of Emirates NBD (ENBD), has picked six banks for a potential benchmark-sized dollar sukuk, or Islamic bond, a source familiar with the matter said on Tuesday.

The lender selected National Bank of Abu Dhabi, HSBC, Standard Chartered, Citi, RBS and ENBD Capital.

Any eventual bond issue will be fully guaranteed by Emirates NBD, lead arrangers said in a mandate announcement seen by Reuters.

Investor meetings kick off in Malaysia on Jan. 5 and will cover Singapore and Abu Dhabi before ending in London on Jan. 10. A sukuk could follow depending on market conditions, said the source who spoke on condition of anonymity.

Benchmark-sized is normally understood to be at least $500 million. ENBD,Dubai‘s largest lender by market value, has just under $2.2 billion in debt maturing in 2012. The government has a 55.6 percent stake in the bank.

An ENBD spokesman was not immediately available for comment.

In December, ENBD Chief Executive Rick Pudner said the bank was eyeing a five year Islamic bond and reviewing the timing of an issue.

The lender was merged with Dubai Bank in October at the Dubai ruler’s behest and investors will be keen for more information on the impact of the deal and how it will be integrated into Emirates NBD.

There is strong demand for sukuk despite the global volatility partly because Islamic investors in the Gulf remain cash-rich and due to the limited supply of sukuk issues.

Emirates NBD shares ended 2 percent lower on Tuesday, after ending 2011 over 6.5 percent higher, outperforming the broader index. (Additional reporting by Rachna Uppal; Editing by Amran Abocar)

By Mirna Sleiman

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1 Comment

  1. Tarek Aziz on January 4, 2012 8:20 am

    It is still very early days to go for an Islamic Bond in Dubai. There are still no improvements in the sentiments as Dubai’s economy seesm still struggling. All fresh monies and investments are actually going to India. It may be noted that the cost of insuring the emirate’s debt against non-payment for five years is still steady at the prevailing rates. Credit-default swaps for Dubai is still very inactive and there are no proper data available on the yield on the current Dubai’s debt papers. Today Dubai needs to ensure that their existing sukuks offer good returns. Any return less that 2 percent is not interesting at all. Such is the present scenario and Dubai banks are already jumping for an Islamic sukuk. The top management of local banks needs to be replaced so that fresh ideas come into play and help the banking sector improve is image internationally going forward.


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