ADCB raises $1.5b from bonds’ sale

The UAE’s third biggest lender by assets said on Wednesday that it pricedthe first 2013 trade for any UAE bank in the Regulation S US dollarbond market and the first-ever 10-year bullet subordinated debt Tier II transaction.

Rated A/A+ by S&P/Fitch with stable outlook, the Abu Dhabi lender once again re-opened the international investor base to local issuers to raise Tier 2 capital.

The subordinated Tier 2 tranche marks the largestsubordinated Tier 2 bond issue out of the Mena region, and the first since 2010.

The two bond issues, $750 million 2.5 per cent, senior notes due 2018, and $750 million 4.5 per cent subordinated notes due 2023, compliant with Regulation S of the US Securities Act of 1933, priced at mid-swaps plus 165 basis points and 265 basis points, respectively.

The lender’s sale follows Abu Dhabi National Energy Company, which issued $2 billion of dollar-denominated debt in December.

UAE issuers are tapping the market to benefit from a drop in borrowing costs, says Bloomberg newswire.

Dubai’s government last month sold $1.25 billion of bonds, with the yield on 10-year securities dropping 40 per cent from its last issue in April, it said.

The average yield on bonds sold by banks in the region fell 75 basis points in the past year to 2.56 per cent yesterday, according to the HSBC/Nasdaq Dubai GCC Conventional Senior Financial Services US Dollar Bond Index.

The ADCB deal was joint lead managed by Abu Dhabi Commercial Bank, Barclays Bank PLC, ING Bank N.V., J.P. Morgan Securities, and National Bank of Abu Dhabi and The Royal Bank of Scotland plc.

The bonds were sold following successful investor roadshows in Geneva, Zurich, London, Hong Kong and Singapore.ADCB met more than 90 fund managers and private banks with investor demand totaling nearly $8 billion when the books closed on February 26.

Demand was equally split between the two issues with over 230 quality accounts across the globe participating, with particular interest from Asia, Europe, the Middle East and Latin America.

Kevin Taylor, Group Treasurer said “pricing on the senior and subordinated notes was tightened by 15 basis points in the 24 hours preceding pricing of the transaction from initial guidance.”

— haseeb@khaleejtimes.com