Text size:

  • Small
  • Normal
  • Large

NBAD has a change of heart over selling bonds

What's up Bank is on the road selling to investors around the world.

In early February, the head of National Bank of Abu Dhabi (NBAD) was adamant that the bank was in no rush to tap the markets. With Greece's debt troubles topping the daily news and talk about a 40 per cent haircut for Dubai World creditors, his attitude made perfect sense. "We don't have our back against the wall," Michael Tomalin, the chief executive of NBAD, said at the time. "We are not obliged, but if we do [issue bonds], it will give us more flexibility." Six weeks later the lender, an investor darling considered a play on Abu Dhabi's heavy infrastructure investments, is on a roadshow selling its bonds to investors around the world.

NBAD, which is 70 per cent owned by the Government, yesterday closed up 0.4 per cent at Dh12.40 in a flat market. Investors have good reason to rejoice the thawing of the credit markets. For one, new debt issues mean more opportunities to invest. The relatively small number of regional bonds has so far left investors with little choice, preventing the market from taking off. "In bonds particularly, investors tend to buy and hold," said Helen Holmes, a fund manager at EIS Asset Management, a unit of the Dubai-based bank Emirates NBD. "There is also a real lack of opportunities available. Now we hope that more liquidity will come to the market as it develops."

Now NBAD and Saudi Arabia's Banque Saudi Fransi are vying for the first issue to successfully break the deadlock that has firmly gripped the markets since Dubai World's November 25 standstill announcement. Dar Al Arkan's US$450 million sukuk issued last month was considered a mixed success because it was scaled back by half and expensive at 10.75 per cent. The state-owned utility Dubai Electricity and Water Authority also plans to issue a $1.5 billion bond by early April. Secondly, the times of high deposit rates are over. Banks have sharply lowered their deposit rates from about 5 per cent to 2 per cent to 3 per cent. Desperate for fresh funds, banks started offering hefty deposit rates early last year.

"Many of these [one-year] deposits have matured or are maturing right now. If investors can afford a little bit more risk they are getting out of that and buying into corporate and sovereign issues," said Ms Holmes, whose bank launched its first conventional MENA fixed-income fund earlier this week. @Email:uharnischfeger@thenational.ae

Back to the top

More articles

Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 A Brabus Mercedes 6x6 Sports Utility Vehicle is readied for display during Auto China 2014 in Beijing, on April 20. Adrian Bradshaw / EPA

In pictures: Auto China 2014 exhibition

Leading automakers have gathered in Beijing for the kickoff of China’s biggest car show, but lacklustre growth and environmental restrictions in the world’s largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased.

 The New York Stock Exchange. Rising interest rates will shift momentum away from bonds and back towards risk assets such as stocks. Richard Drew / AP Photo

Plan ahead for rising interest rates

It is now over five years since the majory central banks slashed interest rates to record low but that is all about to change. So, how will rising interest rates affect you?

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National