With investor demand for Islamic bonds growing, Abu Dhabi-based businesses are increasingly turning to the sukuk market to finance their activities, with four companies since November 2011 having issued sharia-compliant debt instruments. Meanwhile, the first three months of 2012 saw two major conventional bond issuances from Dolphin Energy and the National Bank of Abu Dhabi (NBAD). While the debt market looks healthy – particularly given the context of a challenging global economic climate – one factor that could increase activity in the fixed-income market would be a bond sale from the Abu Dhabi government, which has not issued sovereign debt since 2009.
Following a quiet period in the UAE debt markets, in November 2011 two banks – Abu Dhabi Commercial Bank (ADCB) and Abu Dhabi Islamic Bank (ADIB) – issued sukuks. ADCB, the second-largest lender in the emirate as measured by assets, raised $500m from its five-year Islamic bond, its first foray into the sukuk market, at a profit rate of 4.07%. This was followed shortly by a $500m, five-year sukuk priced at 3.78% from ADIB, the lender’s third issuance of a sharia-compliant bond.
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