Dubai Islamic Bank issues $1 billion Additional Tier 1 perpetual non-call 6-year Sukuk
DIB cements leadership with largest recent AT1 Sukuk at 6.25% profit rate
Dubai: DIB, rated A3 by Moody’s and A by Fitch, the world's first Islamic bank and the largest in the UAE, has successfully priced a $1 billion Additional Tier 1 Perpetual Non-Call 6-Year Sukuk at a profit rate of 6.250%, equivalent to a reset spread of 191.10 basis points over the interpolated US treasury rate.
The transaction reflects strong investor confidence in DIB’s robust credit fundamentals, resilient profitability, and prudent capital management framework.
Executed against a challenging geopolitical backdrop, the issuance attracted significant demand from regional and international investors, reaffirming the Bank’s credit strength and strategic market positioning.
DIB successfully raised $1 billion through the public AT1 markets, marking the largest GCC AT1 issuances in the recent period and reinforcing its position as a leading capital markets issuer.
Strong participation from dedicated Islamic investors further reflects the depth of demand for DIB’s credit and the Bank’s leadership within the global Sukuk investor base.
Sukuk: It is an Islamic financial certificate (similar to a bond). Instead of lending money and charging interest, investors hold partial ownership in an underlying asset, and receive a share of the profits generated by that asset.
Dr. Adnan Chilwan, Group Chief Executive Officer of DIB, said: “The strong outcome of this issuance reflects the market’s continued confidence in DIB’s financial strength, disciplined capital strategy and ability to deliver successful transactions even in challenging conditions.
Trusted issuer: 2.3x oversubscribed
"The depth and quality of demand reaffirm the Bank’s standing as a trusted issuer in the global Sukuk market and underline the resilience of its credit profile.”
The transaction generated robust demand with the orderbook peaking at over $2.3 billion, representing a 2.3x oversubscription rate.
More than 85 institutional accounts from Europe, Asia and the Middle East participated in the Sukuk.
Perpetual Sukuk: The Sukuk has no fixed maturity date. The issuing bank is not obligated to ever return the principal amount, making it a permanent part of the bank's capital unless called.
Geographically, 83% of the Sukuk was allocated to the MENA region and 17% to the UK, Europe and other international investors.
By investor type, 77% was allocated to banks and private banks, 21% to Fund Managers and 2% to Insurance companies, Pension Funds and Sovereign Wealth Funds.
DIB started marketing the Sukuk on Monday, 8 June, through a series of investor calls aimed at updating investors on its recent quarterly financial performance.
Virtual deal marketing
The one-day virtual deal marketing exercise proved highly efficient, particularly in a volatile market environment where minimising execution risk and reducing time spent in the market are critical.
Investor reception was positive, allowing the Bank to open the orderbook on Tuesday, 9 June, with Initial Price Thoughts of 6.625% area.
Non-Call 6-Year: The issuer promises not to redeem or pay back the Sukuk for a minimum of 6 years from the issuance date. After this lock-in period, the bank holds the option to call (repay) the Sukuk on specific distribution dates.
The orderbook quickly grew to $1.7 billion at UK open before peaking at $2.3 billion, allowing pricing to be tightened to a final profit rate of 6.250%.
The Sukuk will be listed on Euronext Dublin and Nasdaq Dubai.
The Joint Lead Managers and Bookrunners on the transaction are Arqaam Capital, ASB Capital, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital, Mizuho, Sharjah Islamic Bank, Standard Chartered Bank and Warba Bank.
