DUBAI - First Abu Dhabi Bank, the largest lender in the United Arab Emirates (UAE), launched a $500 million Islamic bond, or sukuk, on Monday, a document reviewed by Reuters showed, pricing tighter than guidance on strong demand for the issue.

The issue is expected to price later on Monday.

The spread on the five-year sukuk was set at 90 basis points (bps) over U.S. Treasuries at launch, tightened from final guidance of around 95 bps earlier in the day after orders of over $1.35 billion, the document showed.

Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, KFH Capital, Sharjah Islamic Bank, Standard Chartered Bank, and The Islamic Corporation for the Development of the Private Sector were mandated joint lead managers on the deal.

Bank FAB, majority government-owned, is the second lender from the UAE this year to take advantage of an opportunity to issue debt following a significant slowdown in issuances from the Gulf region last year.

Last week, Dubai's Emirates NBD sold a AED 1 billion dirham ($272 million) three-year bond which also priced tighter than guidance amid strong investor interest.

($1 = 3.6729 UAE dirham)

(Reporting by Rachna Uppal; editing by Jason Neely)