Middle East Bonds

UAE bank Emirates NBD this week drew a well diversified $2.6bn order book as it priced its $750m subordinated bond at a tight price.

The sukuk market had its eyes opened to an expansive new landscape this week, as Saudi Electricity Company defied the doubters to bring the first ever benchmark dollar 30 year tranche, writes Dan Alderson.

After two quiet months, the international sukuk market is ending the quarter with a flourish, with $2bn of notes pricing this week.

Corporate sukuk added flavour to the Islamic feast this week, as Emirates, the UAE-based airline, priced a $1bn 10 year amortising sukuk. The deal was issued at 300bp over mid-swaps and received a three times covered order book.

Dubai Islamic Bank is lining up the first bank sukuk of the year — a deal that could kick off a busy month for financial institution issuing Islamic bonds after 2013’s muted start. DIB’s perpetual tier one deal will come via Emirates NBD, HSBC, National Bank of Abu Dhabi and Standard Chartered.

Emirates NBD had a double surprise for bankers this week when it printed a privately placed subordinated debt deal — a rare instrument for a Middle Eastern bank and one that is usually printed in syndicated format.

Middle East sukuk issuance is set to continue to grow and investor demand will grow with it, said senior bankers at an Islamic finance event this week. But regulators and policymakers must do more to help increase the number of non-bank financial institutions if this growth is to be sustainable, warned buyside officials.

Dubai Electricity & Water Authority powered back into the sukuk market this week, pricing a $1bn five year benchmark deal inside the Dubai sovereign curve and achieving in excess of $5.5bn of orders.

The sukuk market is rumbling back into life, with Dubai Electricity & Water Authority having mandated banks as it eyes up to $1bn of sukuk this month. Several other issuers are also lining up deals, meaning the Islamic market’s frozen pipeline could soon thaw.

Dewa is not the only borrower eyeing a return to the sukuk market (see Dewa story). Qatar International Islamic Bank wants to set up a $2bn sukuk programme and has asked its general assembly to approve the plans. The recommendation comes ahead of QIIB’s annual general meeting, which will is due to be held on March 10 in Doha.

JP Morgan plans to make a bigger push in Islamic finance — including sukuk arranging — and has appointed Hussein Hassan to a newly created role as global head of its Islamic finance practice.

Middle East bond issuance came roaring back this week, as the Dubai government and Qatar Telecom broke new ground for the region with long dated, dual tranche deals. The two borrowers aggressively priced a total of $2.25bn of paper, catapulting their curves forward with 30 year offerings — something very seldom seen in the region, writes Dan Alderson.