Middle East Bonds

Islamic finance practitioners grappled with the question of how to open the US market to sukuk issuance and Islamic finance during a panel discussion at Euromoney’s Islamic Finance and Investment conference in London this week.

A spate of downgrades in the Middle East by Standard & Poor’s has been shrugged off by the market with bankers blaming the small sell-off in Kingdom of Bahrain’s bonds on underlying rate movements. They added that investors were more focused on the positive movement in oil prices than the much anticipated downgrade.

Emirates NBD is on track to price the longest Kangaroo bond from a Gulf bank and is marketing a seven year at 225bp over mid-swaps. The bank is keen to establish its presence in the Aussie dollar market, according to bankers.

The Bahrain based International Islamic Financial Market (IIFM) unveiled a new master collateralised murabaha agreement (MCMA) at a workshop in London this week. The framework is designed to offer Islamic entities a standard structure for raising low cost funding using idle Shariah compliant assets as collateral.

The first round of oil price driven rating actions hit the Middle East this week, with Standard & Poor’s taking its knife to Bahrain and Oman and putting Saudi Arabia on negative outlook. The countries’ respective sukuk seemed safe from secondary volatility, although Bahraini paper — now on the cusp of junk — is likely to feel some pressure, said investors.

RAM Ratings has assigned ratings to Abu Dhabi Islamic Bank’s (ADIB) planned senior and subordinated sukuk.

International sukuk issuer Qatar International Islamic Bank (QIIB) has asked shareholders for permission to sell up to Qr3bn ($823m) equivalent in tier one sukuk.

UK Export Finance (UKEF) is in the documentation stages of its first guarantee for a sukuk deal, said the agency’s head of aerospace Gordon Welsh, and plans to test the Islamic bond market with an innovative structure and longer maturities.

National Bank of Abu Dhabi printed its $750m five year bond on Wednesday from a book of $1.8bn, having been successful in attracting emerging market and investment grade accounts despite tight pricing flat to the curve.

First Gulf Bank, the third largest bank by assets in the UAE, is meeting investors in Europe next week regarding a possible Eurobond.

National Bank of Abu Dhabi printed its $750m five year bond on Wednesday from a book of $1.8bn, having been successful in attracting emerging market and investment grade accounts despite tight pricing flat to the curve.

National Bank of Abu Dhabi has released initial price thoughts for a five year dollar benchmark at 90bp over mid-swaps, equating to only around a 10bp pick-up from the secondary trading of its August 2019s.