Dubai Islamic
Bank (DIB) has successfully issued a $500m additional tier 1 (AT1) sukuk with a
competitive profit rate of 5.25 per cent per annum.
The Basel
III-compliant sukuk is expected to enhance the bank’s capital adequacy ratio
and further optimise its balance sheet, underscoring DIB’s strong credit
fundamentals and robust financial position.
The
transaction, executed intraday, attracted substantial interest from a diverse
group of investors, including banks, private banks, and fund managers from
Europe, Asia, and the Middle East.
The sukuk,
which was priced with a reset spread of 133.4 basis points (bps) over the US
Treasury rate, marked the lowest spread for an AT1 instrument globally since
the 2009 financial crisis.
Duba Islamic
Bank sets profit rate to 5.25 per cent from 5.75 per cent
The bank
initially set the profit rate at 5.75 per cent but, due to high demand, was
able to tighten pricing to 5.25 per cent, highlighting strong investor appetite
for the sukuk.
Dr Adnan
Chilwan, group CEO of DIB, commented on the successful transaction: “We are
very pleased with this successful execution in the international capital
markets. The transaction represents the lowest yield achieved by an emerging
market bank since April 2022. It reflects the strong confidence placed by both
international and regional investors in DIB’s strategy, credit story, and
overall financial health.
“This deal also
showcases the large investor base that the UAE enjoys, and I want to express my
gratitude to both our loyal investors and new participants for their continuous
support.”
DIB said the
sukuk would be dual-listed on Euronext Dublin and NASDAQ Dubai, ensuring broad
visibility and liquidity in the international capital markets.
The proceeds
from the sukuk will be used to strengthen the bank’s Tier 1 capital base, which
supports its lending activities and future growth strategies.
The issuance is
part of DIB’s ongoing efforts to diversify its funding sources and maintain a
strong capital position in alignment with Basel III requirements.