Islamic Banking

NBAD Sets Trend With Malaysian Sukuk

Vanessa Doctor, Asia Editor, 24 June 2010

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The National Bank of Abu Dhabi has successfully launched its first sukuk and first Malaysian ringgit-denominated issuance, in its bid to capture a greater share of the world's growing Islamic finance market.

The issuance, worth 500 million ringgit ($155.9 million) is issued under NBAD's MYR MTN programme. The offering was met with enthusiasm from investors who pushed the demand so high it was oversubscribed nearly four times, the bank said in a statement. The highest demand came from fund managers, 48.3 per cent, followed by insurance companies, 21 per cent, financial firms, 19.9 per cent, government agencies, 8.6 per cent, and other corporations, 2.2 per cent.

The transaction was led by HSBC Bank Middle East and Malaysia's Maybank.

"It is a creative avenue as it is our first ever Sukuk issuance, a specifically-designed format of financing that meets the strict investment guidelines of some of the Islamic asset managers and pension funds based in Malaysia and Asia," said Mahmood Al Aradi, the senior general manager of NBAD's financial markets division.

"We believe this will now open the door for other issuers from our part of the world to tap this unique liquidity pool and strengthen further the links that have been established with the Asian investor base," he added.

NBAD had previously offered sukuk through its EMTN issuance, which limited the participation of other countries due to currency restrictions. With Malaysia touted to become an Islamic finance hub in Asia, the new product comes at an opportune time in this sector's development.

The 5-year sukuk has a coupon of 4.75 per cent.

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