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Two Abu Dhabi banks tap debt markets to raise a combined $1.25 billion

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DUBAI – Abu Dhabi Commercial Bank (ADCB) and Abu Dhabi Islamic Bank (ADIB) raised $1.25 billion on Tuesday through the sale of conventional and sukuk bonds, taking advantage of a lull in the region’s troubles.

ADCB issued $500 million of five-year senior unsecured bonds at a 120 basis point discount to U.S. Treasuries (UST), a narrowing of 10 basis points from guidance earlier in the day, a bank filing showed.

Barclays, Deutsche Bank, Emirates NBD Capital, JP Morgan, Mizuho Bank and ADCB itself acted as joint bookrunners on the transaction.

Another bank filing showed that ADIB issued $750 million in perpetual sukuk in the market at a yield of 7.25 percent. Additional Tier 1 (AT1) Sukuk are not callable for 5-1/2 years.

AT1 bonds are the riskiest debt instruments a bank can issue and are perpetual in nature, but lenders can redeem or “call” them after a specified period.

The final yield tightened significantly from the previous guidance of 7.875% after order book topped $7 billion, indicating strong investor demand.

HSBC and Standard Chartered are acting as joint global coordinators and structurers for the offering, with Abu Dhabi Bank, Citibank, Emirates NBD Capital, First Abu Dhabi Bank and JP Morgan acting as joint bookrunners and lead managers.

Both bond sales will be priced on Tuesday.

It follows Dubai-based real estate developer Sobha Realty’s $300 million sukuk sale on Monday, the first public bond sale in the Gulf region since Commercial Bank of Dubai sold a $500 million green bond just over a month ago.

The region’s debt problems have subsided due to interest rate uncertainty.

(Reporting by Yousef Saba; Writing by Rachna Uppal; Editing by Jason Neely and Emma Rumney)

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