Emirates NBD 'names banks to plan Swiss franc bond issue'

Emirates NBD is planning to issue a Swiss franc-denominated bond, four sources said yesterday.

The lender has appointed banks for the issue, one banking source familiar with the matter told Reuters.

“The bank is looking at it [and] has appointed banks,” source said, declining to name the mandated banks.

Emirates NBD has just over Dh8 billion in debt maturing this year, including a $1.5-billion (Dh5.50 billion) loan due in October.

The bank reported a sharp fall in quarterly profit on Wednesday for a second consecutive quarter on provisioning for bad loans. Its Islamic subsidiary, Emirates Islamic Bank, reopened Gulf bond markets this year with a $500 million Islamic bond, or sukuk, in January, which carried a profit rate of 4.72 per cent.

In 2007, Emirates NBD completed a 100-million Swiss franc (Dh399.20 million) three-year guaranteed floating rate bond which paid 7 basis points over three-month Swiss Libor, according to Thomson Reuters data. Under the terms of a guaranteed bond, the principal and interest is paid by someone other than the issuer.

In the last two years, other Gulf banks have sought to take advantage of a favourable swap rate between the Swiss franc and US dollar, the currency most Gulf currencies are pegged to. Commercial Bank of Qatar, Abu Dhabi Commercial Bank and First Gulf Bank have all tapped Swiss liquidity since 2010.


UPDATE 1-UAE lender ADCB eyes benchmark Islamic bond – leads

DUBAI, Nov 14 (Reuters) – Abu Dhabi Commercial Bank has picked four banks for a potential Islamic bond, or sukuk, which could be launched this week, making it the second lender from the emirate currently eyeing a chunk of Islamic liquidity amid dicey global markets.

ADCB has picked itself as well as Bank of America, J.P. Morgan Chase and Standard Chartered as joint lead arrangers and bookrunners for a debut dollar-denominated sukuk, a document from arranging banks showed on Monday.

The sukuk is “expected to be launched during the week of 14th November subject to market conditions,” the document said.

Last week, Abu Dhabi Islamic Bank announced a series of roadshows kicking off in Kuala Lumpur on Nov. 17 and ending in London on Nov. 21.

ADCB is not planning any formal roadshows ahead of a potential sukuk issue, a source at an arranging bank told Reuters.

The bank has not issued an Islamic bond previously, but is a name familiar to investors in Malaysia, one of the world’s biggest Islamic finance markets, after it issued a 750 million ringgit conventional bond last year.

“It appears markets have come to the conclusion that the sukuk format is a better way forward for many local issuers looking to raise money,” said Nick Stadtmiller, fixed income analyst at Emirates NBD.

“Islamic institutions still have cash to deploy, and demand for Islamic-compliant assets still looks fairly strong.”

The sukuk market has also proved more resilient due to the profile of investors, who tend to hold the bonds to maturity, reducing the chance of big swings in secondary market prices triggered by shorter-term speculators bailing out of positions.

A note from Standard & Poor’s earlier this week rating the proposed notes said that ADCB was eyeing a five-year $750 million sukuk issue.

ADCB’s third-quarter net profit nearly doubled, beating analyst forecasts. Its shares are up over 40 percent this year.

The bank has a 500 million pound bond maturity due on Nov. 16, according to Thomson Reuters data, although the bank has the resources to meet this and the sukuk is more about taking advantage of an opportunity to print, the source at the arranger said.


Islamic banks got good prospects HSBC

Recent regulatory changes in Kuwait and Qatar, retail client preferences for Shariah-compliant banking products, and stronger balance sheets and funding positions, offer better growth prospects for Islamic banks compared with conventional peers, HSBC said as it initiated coverage on four Islamic banks.

The brokerage initiated Saudi Arabia’s Alinma Bank and Qatar Islamic Bank with “overweight”.

In an October note, the brokerage said it expects Alinma, which has no legacy credit risk in its loan portfolio, to double its market share in the medium term, helped mainly by corporate lending.

HSBC said it expects Qatar Islamic Bank to gain from recent regulatory changes in the country that do not allow conventional banks to offer Islamic banking services.

The brokerage downgraded Abu Dhabi Commerical Bank to “neutral” from “overweight” saying slowing private sector activity, rising foreign exchange refinancing costs and a flattening US yield curve will impact net interest margins in the long term.

The brokerage also upgraded Qatar National Bank to “neutral” from “underweight” citing the bank’s excess capital.

The brokerage however, cut its price targets on Saudi Arabian banks including Riyad Bank and Samba as it expects the cash-rich corporate segment and direct intermediation by the government in the private sector to reduce their growth opportunities.

HSBC also cut its price targets on Abu Dhabi banks including UNB and Abu Dhabi Commercial Bank on slowing growth outlook.

The brokerage cut price targets on Egyptian banks EGB and Credit Agricole Egypt on weaker revenue growth.