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Sharjah Islamic Bank plans $400m sukuk

By Muzaffar Rizvi DUBAI -- Sharjah Islamic Bank , or SIB , plans to issue a $400 million Islamic bond, which will price today, according to a document by the arranging banks.

Order books are above $2 billion with pricing on the five-year, US dollar-denominated issue expected to be 287.5 basis points above midswaps, according to the document seen by Reuters.

" Sharjah Islamic Bank 's five-year sukuk in dollars may be priced to yield 275 basis points to 300 basis points over swaps," according to three people with knowledge of the sale.

The issuance of sukuk is expected to close today and be listed on the London Stock Exchange. This is the second sukuk issuance from Sharjah Islamic Bank , after its first successful issuance in 2006.

"The road shows launched last week by Sharjah Islamic Bank to mark the bank's sukuk issuance have been a resounding success," Mohammed Abdullah, Chief Executive Officer of SIB said in an email statement to Khaleej Times.

The CEO's remarks followed meetings between SIB management and investors, including investment portfolios, finance companies and banks in the Middle East, Asia and Europe, where the Sukuk issuance received a great response.

"The road shows launched by SIB to promote the sukuk issuance have garnered a lot of attention, and there has been huge demand from all segments of investors in the countries in which the road shows took place - a fact that we take as a positive sign for the success of the bond issue," Ahmed Sa'ad, Deputy CEO of SIB and head of the sukuk
campaign, said.

The lender said in March it planned to issue an Islamic bond, or sukuk, of between $300 million to $500 million in a letter to the central bank. The bank, which is listed on the Abu Dhabi bourse, mandated HSBC and Standard Chartered as joint lead managers for the sukuk.

Sa'ad explained that the road shows were launched in Abu Dhabi and Dubai, from where they travelled to Asia, including Singapore, Kuala Lumpur, and Hong Kong during the first week of the promotion, moving on to the final leg of the tour in Europe this week and holding several meetings in London.

"Investors have expressed their confidence in the rewarding investment potential of this sukuk, which will enhance SIB 's financial position as well as its ability to seize promising opportunities in the market and achieve future growth," Sa'ad said adding that this clearly demonstrates SIB 's strong financial position, as well as the influential economic position of the UAE and the great support given to the financial and banking sector in the country.

Sa'ad also stated that the volume and value of the sukuk issuance will be determined by SIB 's joint lead managers after the completion of the road shows and the closing of the subscription today.

"The positive response to the road shows has exceeded our expectations, but at the same time it is normal and well-matched to the financial strength of the bank, which was one of the first banks to have its rating raised by Standard & Poor's Ratings Services during the global financial crisis," the Deputy CEO added.

SIB is rated BBB+ by Fitch and Standard & Poor's.

The Gulf sukuk market has struggled to pick up, despite a ambitious growth outlook for the industry, hampered by high profile defaults, the Dubai's debt crisis and a wave of anti-government protests sweet the Middle East. Issuance so far this year has been limited mainly to government-linked and high-rated bonds.

© Khaleej Times 2011