DUBAI (ALETIHAD)
Dubai Islamic Bank (DIB) successfully raised $1 billion through public Additional Tier 1 markets, marking the largest GCC AT1 issuance in the recent period.
Announcing this in a statement, DIB said it “has successfully priced a $1 billion Additional Tier 1 Perpetual Non-Call 6-Year Sukuk at a profit rate of 6.250%.”
Additional Tier 1, or AT1, refers to a form of bank capital that helps strengthen a lender’s capital base and absorb losses if needed. A perpetual instrument has no fixed maturity date, while “Non-Call 6-Year” means the bank cannot redeem, or call back, the sukuk before six years. Sukuk are Shariah-compliant financial certificates often described as Islamic bonds, structured to generate returns without conventional interest.
DIB said the profit rate of 6.250% was equivalent to a reset spread of 191.10 basis points over the interpolated US treasury rate.
The bank said the transaction reflected strong investor confidence in its credit fundamentals, resilient profitability and prudent capital management framework.
Executed against a challenging geopolitical backdrop, the issuance attracted significant demand from regional and international investors, reaffirming the bank’s credit strength and strategic market positioning, the statement said.
DIB, rated A3 by Moody’s and A by Fitch, said the issuance reinforced its position as a leading capital markets issuer. Strong participation from dedicated Islamic investors also reflected the depth of demand for DIB’s credit, the statement said.
Dr Adnan Chilwan, Group Chief Executive Officer of DIB, said: “The strong outcome of this issuance reflects the market’s continued confidence in DIB’s financial strength, disciplined capital strategy and ability to deliver successful transactions even in challenging conditions. The depth and quality of demand reaffirm the Bank’s standing as a trusted issuer in the global Sukuk market and underline the resilience of its credit profile.”
The transaction generated robust demand, with the order book peaking at more than $2.3 billion, representing a 2.3 times oversubscription rate. More than 85 institutional accounts from Europe, Asia and the Middle East participated in the sukuk.
Geographically, 83% of the sukuk was allocated to the MENA region and 17% to the UK, Europe and other international investors. By investor type, 77% was allocated to banks and private banks, 21% to fund managers and 2% to insurance companies, pension funds and sovereign wealth funds.
DIB started marketing the sukuk on Monday, June 8, through a series of investor calls aimed at updating investors on its recent quarterly financial performance. The bank said the one-day virtual deal marketing exercise proved highly efficient, particularly in a volatile market environment where minimising execution risk and reducing time spent in the market are critical.
Investor reception was positive, allowing the bank to open the order book on Tuesday, June 9, with initial price thoughts in the 6.625% area. The order book quickly grew to $1.7 billion at the UK open before peaking at $2.3 billion, allowing pricing to be tightened to a final profit rate of 6.250%.
The sukuk will be listed on Euronext Dublin and Nasdaq Dubai. The joint lead managers and bookrunners on the transaction are Arqaam Capital, ASB Capital, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital, Mizuho, Sharjah Islamic Bank, Standard Chartered Bank and Warba Bank.