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13 February 2020

FAB issues three-year sterling-denominated bonds

The largest lender in the UAE offered a three-year GBP 450 million ($583 million) note at a yield premium of 98 basis points over UK gilts

Since the beginning of the year, borrowers have sold a record GBP 37 billion of new debt, lured by falling funding costs/iStock

by Bloomberg

First Abu Dhabi Bank (FAB) issued the Middle East’s biggest sterling-denominated bond in almost a decade as post-Brexit expectations of a cut in interest rates squeeze borrowing costs in the British currency.

The deal attracted around GBP 1.25 billion of orders by midday in London. Since the beginning of the year, borrowers have sold a record GBP 37 billion of new debt, lured by falling funding costs.

Speculation that the Bank of England will support the economy through post-Brexit uncertainty has driven yields on high-grade corporate debt in the currency 27 basis points lower during 2020 to 1.85 per cent, double the decline in the euro market.

The Abu Dhabi-based bank’s new sterling bond will be the biggest syndicated deal in the currency out of the Middle East since a GBP 550 million note sold by International Petroleum Investment Company in 2011.

FAB appointed Barclays, HSBC Holdings and Nomura Holdings as lead arrangers for the bond issuance.

The lender also issued Islamic bonds worth $500 million last month. Additionally, Kuwait's Boubyan Bank issued $750 million in five-year Sukuk, Saudi Arabia's Riyad Bank announced plans to issue dollar-denominated Sukuk, while Dubai's Emirates NBD raised $500 million in bonds earlier this month.

RELATED STORIES: Sukuk FAB Riyad Bank Boubyan Bank First Abu Dhabi Bank





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