Tuesday, Sep 01, 2009
(Adds more CFO comments, details, background)
DUBAI (Zawya Dow Jones)--Emirates NBD plans to tap the bond market with a $2 billion EMTN program but is waiting on favorable market conditions and a government bond guarantee to take effect in the United Arab Emirates, a senior bank executive said Tuesday.
"The planned EMTN program is an integral part of our balance sheet management. There is no urgency to raise funding but it is going to be opportunistic," Sanjay Uppal, chief financial officer at Emirates NBD, told Zawya Dow Jones in a phone interview.
"Various considerations will determine the timing of the launch of the program," he said, adding that the bank may go to market this year but will be looking for an attractive pricing for a tenor that ranges between 3 and 5 years.
"The Federal bond guarantee program will definitely boost confidence in the market," said Uppal.
Legislation approved by the Federal National Council, or FNC, in June this year will allow the Ministry of Finance to guarantee bank-issued bonds, medium-term notes, and Islamic sukuk.
The legislation is now awaiting approval by His Highness Shaikh Khalifa Bin Zayed Al Nahyan.
On June 16, the FNC passed legislation allowing the federal government to issue bonds totaling the lesser of 45% of gross domestic product or AED300 billion.
MATURING DEBT
Emirates NBD, the region's largest lender by assets, remains confident that it can refinance or pay off the AED2.5 billion in debt that falls due this year, Uppal said.
"We're quite comfortable we can exchange the maturing debt with any other sort of lending, be it interbank, wholesale or even debt with a similar tenor," he added.
"The medium-term funding maturing this year is very small compared to our balance sheet," Uppal said.
Emirates NBD has about AED19.5 billion in outstanding EMTNs and syndicated bank borrowing of AED5.5 billion.
So far this year, the bank has paid back AED3.7 billion, with AED2.5 billion left to be repaid by the end of the year, Uppal said.
As of July 2009, the bank's loan-to-deposit ratio stood at 111%, which is higher than the 100% required by the UAE Central Bank.
Uppal told Zawya Dow Jones earlier this year that the bank was confident that the ratio would be reduced with the help of improving liquidity and the government's bond guarantee.
Emirates NBD's second-quarter net profit fell 41% as impairment losses on its financial assets more than quadrupled to AED1.15 billion during the period.
The region's top banks have been hit badly by lower oil prices, a collapsing real estate market and deteriorating assets as the Gulf suffered its worst economic contraction in almost a decade.
Emirates NBD, and three other UAE banks, were placed on review for possible rating downgrades by Moody's Investors Service on Aug. 10. The ratings agency cited the rising challenges facing the banking sector, the result of a a distressed domestic property market, as well as the economic slowdown forecast for 2009.
Emirates NBD shares last traded Tuesday 0.3% higher at AED3.75 in a broadly positive market.
-By Mirna Sleiman, Dow Jones Newswires, 0097143644966, mirna.sleiman@dowjones.com
Copyright (c) 2009 Dow Jones & Co.
(END) Dow Jones Newswires
01-09-09 0638GMT
