UAE's emirates Islamic bank prices $500 million sukuk

UAE’s emirates Islamic bank prices $500 million sukuk

Sukuk is EIB's second debt sale this year; Islamic bond priced at 310 bps over midswaps with 4.147 pct coupon; Tight pricing suggests strong demand for issue

July 4, 2012 6:13 by Reuters

Emirates Islamic Bank, the sharia-compliant arm of Dubai’s largest lender Emirates NBD , priced a $500 million sukuk on Wednesday, as the lender took advantage of strong demand for Islamic debt from the Gulf Arab region.

The sukuk, due to mature in January 2018, priced at par at a spread of 310 basis points over midswaps and carried a profit rate of 4.147 percent, lead arrangers said.

It is EIB’s second debt markets foray this year, after the lender issued a $500 million Islamic bond in January. That issue carried a profit rate of 4.718 percent.

That sukuk, maturing in 2017 was bid at 103.25 cents to the dollar on Wednesday, to yield 3.9 percent.

Following substantially oversubscribed bond sales from Dubai-based mall developer Majid al Futtaim Holding and the Bahrain government last week, EIB would also have benefited from the recent tightening of spreads and increased international interest for regional debt.

On Tuesday, EIB had issued initial price talk in the area of 330 basis points over midswaps.

A significant tightening of guidance at launch indicates there was strong demand for the deal; arranging banks said books were around $3.75 billion ahead of launch.

Emirates NBD Capital, Credit Agricole, Dubai Islamic Bank, HSBC Holdings and Standard Chartered Plc were bookrunners on the transaction.

(Reporting by Mala Pancholia, Rachna Uppal, Editing by Greg Mahlich and Dinesh Nair)