Launch Partners

Tuesday, January 31, 2023

Launch Partners

Case study: DIB’s inaugural sustainability Sukuk

Dubai Islamic Bank (DIB) has raised US$750 million in its landmark debut sustainable Sukuk offering, making it the first financial institution in the UAE to do so.

The five-year issuance, also the largest international capital market offering from a GCC bank since February 2022, generated immense interest from investors across Europe, Asia and the Middle East, with demand topping over US$1.6 billion, a 2.3 times oversubscription.

The overwhelming demand tightened pricing for the paper from an initial guidance of around 175bps to 155bps over five-year US treasuries; the offering was finally priced at a profit rate of 5.49% per year.

Issued under the Islamic bank’s Sustainable Finance Framework, released in October, the deal marks the first in a potential pipeline of green and social initiatives. ISFI understands that DIB intends to launch a slew of Shariah compliant sustainability finance instruments, including green financing for electric vehicles.

Stressing that the deal is an important milestone in the bank’s commitment to sustainable finance and the UAE’s net-zero agenda as well as the Dubai Clean Energy Strategy, DIB Group CEO Dr Adnan Chilwan commented: “I was particularly pleased with the investor response which enabled us to issue a larger size well within our pricing parameters and the success of this transaction continues to highlight the confidence investors place in DIB.”

Green and sustainability Sukuk are few and far between in the GCC. Southeast Asia, notably Malaysia and Indonesia, command the lion’s share of sustainability-related Islamic offerings — Etihad Airways, Majid Al Futtaim and Saudi Electricity Company and the IsDB are the few GCC institutions to have tapped this market. It is hoped that DIB’s Sukuk would pave the way for other UAE banks to follow suit.

Standard Chartered Bank acted as the deal’s sole sustainability structurer and, along with Bank ABC, DIB, Emirates NBD Capital, First Abu Dhabi Bank, HSCB, KFH Capital, Sharjah Islamic Bank and the Islamic Corporation for the Development of the Private Sector, acted as the joint lead manager and bookrunner on the transaction.

Dubai Islamic Bank’s inaugural sustainability Sukuk

US$750 million


22nd November 2022
Summary of terms and conditions
Issuer
DIB Sukuk
Obligor
Dubai Islamic Bank
Size of issue
US$750 million
Tenor
Five years
Issuance price
155bps over five-year US treasuries
Profit rate
5.49%
Payment
With the principal at maturity date
Currency
US dollar
Issue date
22nd November 2022
Arranger
Dubai Islamic Bank
Dealers
Dubai Islamic Bank, Standard Chartered Bank
Sole sustainability structurer
Standard Chartered Bank
Joint lead managers and bookrunners
Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital, Sharjah Islamic Bank, Standard Chartered Bank, the Islamic Corporation for the Development of the Private Sector
Governing law
English law
Islamic structure
Ijarah
Listing
NASDAQ Dubai
Euronext Dublin
Underlying asset
Real estate Ijarah assets and non-real estate Ijarah assets
Rating
‘A’ by Fitch Ratings and ‘A3’ by Moody’s Investors Service, both with a stable outlook
Shariah advisor(s)
Shariah supervisory committee of Dubai Islamic Bank
Dar Al Sharia Islamic Finance Consultancy
Standard Chartered Global Shariah Supervisory Committee
Tradability
Yes
Face value/minimum investment
US$100,000

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