Abu Dhabi’s FAB easily pulls in investors for second bond issue of 2023

Dubai: Abu Dhabi’s FAB has issued its second debt issue in 10 days, with the latest being a 5.25 year $600 million bond. It was priced in at US Treasury plus 105 basis points, leading to an ‘in-all’ yield of 4.514 per cent.

The bond issue was also the first dollar-denominated conventional bond issuance from a MENA FI issuer, which ‘achieved the lowest spread by any bank globally for a fixed USD five-year conventional bond’ so far this year.

Earlier, the UAE’s largest bank had issued a $500 million five-year Sukuk, and with the new one, FAB becomes the ‘only regional bank to have successfully accessed the debt capital markets twice this year’.

“Having achieved a deeply negative new issue premium, especially when taking into account the intra-day movement in USTs, is a great result,” said Rula AlQadi, Group Treasurer at FAB. “This success reinforces FAB’s position as a ‘flight-to-quality’ for global investors.

“We have now updated our senior curve in both Sukuk and Bond format this year, which will enable us to deploy a more efficient pricing strategy across our balance-sheet.”

Getting ‘negative new issue premium’

The $600 million bond received orders of $1.75 billion, with 76 per cent of the issue placed with ‘high-quality’ investors outside the MENA region.

Pricing represented a deeply negative new issue premium, which is a ‘phenomenal achievement when compared to global banks paying an average 10 basis point new issue premium on their issuances’.