Dubai Islamic Bank plans to sell dollar-denominated $500m sukuk

Dubai: Dubai Islamic Bank, the UAE’s largest Islamic lender, is planning to soon sell US dollar-denominated senior sukuk, or Islamic bonds. Banks have already been hired for the deal, which is expected as soon as next week and is likely to be around $500 million in size, one of the sources familiar with the matter said.

Several issuers from the Gulf are expected to return to the international debt markets in the next few weeks following a lull in activity over the summer, bankers said. Companies and governments are seeking to lock in funding while global interest rates remain low, ahead of expectations of policy tightening from the US Federal Reserve.

While a rebound in energy prices this year has reduced the financing needs of the oil-producing Gulf region, corporate issuance - including from government-related entities - to refinance loans and bonds due this year is expected to remain sizeable, the Institute of International Finance has said.

The Gulf so far this year has raised a combined $95 billion in the international markets, while in 2020 international bonds from the region totalled $111 billion, dominated by sovereigns and quasi-sovereigns, said the IIF.

DIB sold $1 billion in five-year senior sukuk in June as well as $500 million in Additional Tier 1 sukuk in April, a deal that at the time set a record low rate for AT1 instruments from the region.