Abu Dhabi Islamic Bank is set to become the first Gulf Arab company to issue a hybrid Islamic bond this week, but investors are likely to demand a big premium for the rare structure.
The bank is expected to raise at least $500 million to shore up its core capital, to comply with tighter Basel III global standards for Tier 1 capital which will be introduced in the United Arab Emirates in coming years.
In recent years, Gulf lenders including Commercial Bank of Qatar, Burgan Bank and Saudi Hollandi Bank
have sold instruments to raise Tier 2 capital.
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