Business | Banking

Emirates NBD completes 750m offshore yuan bond issue

To pay 4.875% on three-year note that was oversubscribed 5.7 times

  • By Babu Das Augustine, Deputy Business Editor
  • Published: 00:00 March 8, 2012
  • Gulf News

Emirates NBD
  • Image Credit: Ahmed Ramzan/Gulf News archive
  • Among the top 15 banks in the Arab countries ranked by assets, eight of them are UAE-based, with Emirates NBD on top.

Dubai: Emirates NBD, the UAE's largest bank by assets, yesterday completed the inaugural issuance of 750 million offshore yuan ($120 million, Dh435.87 million) Fixed Rate Notes, maturing in 2015.

The offshore yuan bond, also popularly known as dim sum bonds from Emirates NBD, forms part of the bank's $7.5 billion Medium Term Note Programme.

The bonds were priced at a fixed coupon of 4.875 per cent and rated A3 by Moody's and A+ by Fitch.

The bank said it received enthusiastic response from the market with a final order book of 4.3 billion offshore yuan across 98 orders, oversubscribed 5.7 times.

Emirates NBD announced investor meetings on February 22 with a two-day road show covering Hong Kong and Singapore.

After the road show the bank opened book mid-morning Asia time on Monday with initial pricing guidance of 5 per cent area.

"Accounts reacted positively, allowing Emirates NBD to close the books and price on the same afternoon at the tight end of the guidance," the bank said in a statement yesterday.

New source

The issue saw diverse distribution by investor type with private banks allocated 43 per cent of the issue, fund managers and insurance 38 per cent, banks 8 per cent, hedge funds 5 per cent and the balance allocated to other types of investors.

Allocation per geography was 57 per cent in Hong Kong and China, 30 per cent in Singapore, 5 per cent Taiwan, 7 per cent Europe and 1 per cent Middle East.

Fixed income analysts believe that the success of Emirates NBD in issuing the offshore yuan bonds will open a new source of funding for GCC companies.

"The offshore yuan (dim-sum) market is new for GCC issuers, although various global borrowers have successfully accessed it over recent months and shown that there is a decent pool of liquidity there to be tapped," said Chavan Bhogaita, head of markets strategy unit at National Bank of Abu Dhabi.

The dim-sum market tripled in size last year, to $16.8 billion, according to Hong Kong Monetary Authority data.

The dim sum bond market really began to take off in mid-2010, after the People's Bank of China loosened its grip on the yuan.

Emirates NBD said yesterday that the bank achieved its issue objectives of opening a new market and diversifying further its funding profile. With the success of Emirates NBD, analysts expect more corporate issuers with larger issues to tap the offshore yuan market.

"The so-called dim-sum bonds are becoming a more common occurrence for corporates and financials globally.

"ENBD may well be the first from this region, but I suspect that over time you will have more," said Abdul Qader Hussain, chief executive of Mashreq Capital.

Emirates NBD Capital, HSBC Bank Plc and Standard Chartered Bank were joint lead managers and bookrunners on the transaction.

This is the second issue by the Emirates NBD Group in 2012, following the Emirates Islamic Bank's successful dollar benchmark sukuk in January.

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