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By Yousef Saba
DUBAI, Nov 12 (Reuters) - Dubai Islamic Bank, the
United Arab Emirates' largest Islamic lender, on Thursday sold
$1 billion in Additional Tier 1 sukuk, or Islamic bonds, at
4.625%, a document from one of the banks arranging the deal
showed.
Overall debt issuance from the Gulf so far this year has
already surpassed last year's total, again topping $100 billion
and setting a new record as borrowers - especially governments -
seek to bolster their finances amid the coronavirus crisis and
weak oil prices.
Several more debt sales are expected before year-end,
banking sources said.
DIB began marketing the notes at around 5.25% earlier on
Thursday and received over $5.5 billion in orders for the debt
sale, the document showed.
"Very tight pricing, coupled with a 5-1/2-times
oversubscription, indicates high interest from investors as they
lack alternative shariah-compliant instruments, in which there
has been a long mismatch between supply and demand," a fixed
income strategist said.
Additional Tier 1 (AT1) bonds, the riskiest debt instruments
banks can issue, are designed to be perpetual in nature, but
lenders can call them after a specified period.
Other banks in the UAE, including First Abu Dhabi Bank,
Emirates NBD and Commercial Bank of Dubai have also sold AT1
bonds this year as they seek to shore up their Tier 1 capital as
they book higher loan loss provisions amid the coronavirus
crisis.
The sukuk's first call date is in May 2026. The profit rate
will reset in November 2026 based on a correlation with six-year
U.S. Treasury swaps and will reset every six years thereafter.
The deal was arranged by Dubai Islamic Bank, Emirates NBD
Capital, First Abu Dhabi Bank, HSBC,
Sharjah Islamic Bank, and Standard Chartered.
(Reporting by Yousef Saba; Editing by Jacqueline Wong and Chizu
Nomiyama)