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UAE lender FGB raises $650 mln from 5-yr bond

Final pricing at 200 bps over midswaps; FGB sukuk attracted strong demand – sources; Orders at around $3.8 bln - source involved in deal


July 27, 2011 8:37 by

UAE lender First Gulf Bank raised $650 million from the sale of five-year Islamic bonds, or sukuk, on Tuesday, in a significantly oversubscribed deal that benefited from solid global demand for Sharia-compliant paper.

The sukuk priced at 200 basis points over five-year midswaps, in line with earlier guidance, offering a profit rate — equivalent to a coupon — of 3.797 percent, two sources involved in the deal said.

One of the sources, who has direct knowledge of the transaction, said total subscriptions were around $3.8 billion and the deal attracted more than 200 orders.

A regional trader said FGB’s sukuk was already trading 1 point higher soon after pricing, at 1310 GMT.

Earlier, two market sources said that the bank, the United Arab Emirates’ second-biggest lender by market value, had cancelled the final leg of roadshows in Switzerland on Tuesday.

Investor appetite for Islamic debt from the region has proved resilient despite market volatility.

Issues from entities such as Sharjah Islamic Bank , which launched a $400 million sukuk in May, and HSBC Middle East, with a $500 million offering the same month, have already set a positive tone with both issues well oversubscribed.

Citi , Standard Chartered and HSBC were mandated bookrunners for the FGB issue, while Dubai Islamic Bank and National Bank of Abu Dhabi were appointed senior co-managers.

Three other UAE-based Islamic banks were appointed co- managers.

FGB, 67 percent owned by Abu Dhabi’s ruling family, set up a new $3.5 billion Islamic bond programme this month, paving the way for its first sukuk sale.

Recent market volatility, mainly due to euro zone debt worries, led some other Gulf issuers, including Abu Dhabi’s Dolphin Energy and Tourism Development and Investment Co (TDIC), to refrain from issuing bonds until conditions are considered more stable.

But FGB was able to take advantage of improved market sentiment, after a new Greek debt deal was agreed last week, and a limited window of opportunity to issue ahead of the holy month of Ramadan.

The bank this month reported a 13 percent rise in second-quarter profit. (Additional reporting by Dinesh Nair; Writing by Rachna Uppal; Editing by Susan Fenton)


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