Issuer: EI Sukuk Company
Size: Dh1 billion
Structure: Sukuk
Tenor: Three years
Banks: Emirates NBD Capital (global coordinator), Dubai Islamic Bank, First Abu Dhabi Bank, and Standard Chartered (joint lead managers and joint bookrunners)
Date: February 2023
Over the past few years, the UAE government has been championing the growth and development of the domestic debt market, spurring local currency issuance in sukuk and conventional bond format.
One bank at the forefront of this development is Emirates Islamic Bank, a subsidiary of Emirates NBD group, which broke new ground for the UAE last year when it became the first financial institution from the country to issue a dirham-denominated sukuk.
The Dh1 billion ($270 million) three-year deal in February was more than twice oversubscribed with an orderbook of Dh2.5 billion, enabling the issuer and the bookrunning banks to price it at a spread of 67 basis points over UAE government treasuries, with a profit rate of 5.05 %.
Importantly, the launch of the sukuk followed Emirate NBD’s debut Dh1 billion three-year bond sale in January – again the first by a UAE bank – which was priced wider than the sukuk at 83bp over UAE government treasuries.
The importance of the sukuk is that it not only helps deepen and develop the local-currency market, but also expands financing options
Both transactions came after the UAE ministry of finance issued Dh9 billion in two-, three- and five-year bonds in 2022. This provided the reference point for other UAE issuers looking to tap the local-currency market.
Indeed, apart from being the first such sukuk from a UAE bank, the importance of the sukuk is that it not only helps deepen and develop the local-currency market, but also expands the financing options for UAE corporations that have shariah-compliant funding needs.
This was highlighted at the time of the transaction by Salah Amin, CEO of Emirates Islamic, who said in statement that it underscores the role of the dirham sukuk market as a “significant and competitively priced source of funding for corporates.”
Mohammad Kamran Wajid, deputy CEO of Emirates Islamic, added that the transaction was fully aligned to the UAE government’s objective of developing the local debt market, positioning the UAE as a global capital of the Islamic economy.
