Monday, Aug 29, 2011
Gulf News
Abu Dhabi: Abu Dhabi-based Al Hilal Bank plans to raise $500 million (Dh1.8 billion) from the sale of Islamic bonds or sukuk later this year, its chief executive officer said yesterday.
At this stage, we are finalising the issue and the terms. The sukuk would support the banks growth and help diversify the source of funds. This will be our first issuance, Mohammad J. Berro told Gulf News in a telephone interview.
He said the tenure of the sukuk is going to be five years. Asked about the coupon rate on the Islamic bond, Berro said it would depend on rating, market conditions and timing.
We are hoping to close the issue by the end of the last quarter this year, Berro said.
He said the currency in which the sukuk would be denominated and the lead manager to the issue would be announced at a later stage.
Commenting on the development, Mousa Haddad, head trader with National Bank of Abu Dhabi Asset Management, told Gulf News that since Al Hilal Bank is backed by the Abu Dhabi government, its sukuk would be low-risk.
The market is interested in these kinds of investments. Theres a limited number of Islamic papers around, he added.
Broadly speaking, the market for sukuk this year has been buoyant and international investors have been keen buyers of sukuk issued in the Middle East and North Africa (Mena) region. The year started with the Emaar sukuk, which effectively opened the market after a long pause.
Part of the reason for the increase in issuance this year in the region is because the Gulf Cooperation Council (GCC) is a natural home for buyers of sukuk theres a ready investor base in the region. Regional investors are particularly keen on strong regional names; investors were keen buyers of the Sharjah Islamic Bank and Islamic Development Bank sukuks.
Global Islamic bond sales are up 24 per cent in the first half of this year to $7.8 billion from the same period last year as borrowing costs declined. Issuance reached a record $31 billion in 2007.
The average yield on global Islamic debt fell to the lowest in more than six years on June 8, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index. The rate rose three basis points to 3.84 per cent on June 13.
By Himendra Mohan Kumar, Staff Reporter
Gulf News 2011. All rights reserved.
