Emirates Islamic, the Islamic banking arm of the Emirates NBD Group, announced the successful pricing of its first dirham-denominated sukuk, amounting to one billion dirhams, the first of its kind by an Emirati bank.
A statement issued yesterday stated that the group’s success in issuing sukuk would support its ability to expand the financing options available to Emirati companies that require Sharia-compliant financing, as well as improving the process of developing the medium-term yield curve for sukuk denominated in UAE dirhams.
The issue, with a maturity of three years, witnessed strong demand from investors, and requests exceeded the volume of supply by 2.5 times.
The strong order book, which exceeded 2.5 billion dirhams, allowed Emirates Islamic to reduce the profit rate to 5.05%, a difference of 67 basis points from the UAE government treasury bonds.
The success of selling the new sukuk issuance from Emirates Islamic reflects the bank’s commitment to contribute to increasing the liquidity of the sukuk market denominated in local currency following establishing the medium-term yield curve for the Ministry of Finance.
The sukuk launch follows Emirates NBD’s sale of one billion dirhams of bonds in January.
Salah Amin, CEO of Emirates Islamic, said: “The success of Emirates Islamic’s issuance of the first dirham-denominated sukuk confirms the role of the local currency bond market as an important source of financing for companies at attractive prices.”
He added, “The strong demand for the issuance represents great confidence on the part of international investors that are compatible with Islamic law, and shows the growing demand for fixed income products and services denominated in dirhams.”
The issuance expands the financing options available to Emirati companies looking for Sharia-compliant financing.