x Abu Dhabi, UAEFriday 21 July 2017

Emirates NBD's set to price Tier 1 bond issue

Emirates NBD plans to price its first core capital-boosting bond on Wednesday, arranging banks said, amid strong demand for the imminent deal.

Emirates NBD plans to price its first core capital-boosting bond on Wednesday, arranging banks said, amid strong demand for the imminent deal.

Price guidance for the perpetual bond, meaning it has no fixed maturity date but cannot be redeemed before six years at least, was set at 6 per cent on Wednesday morning, after indications of the low 6 per cent area released on Tuesday.

There is a 50 cents rebate for private banks.

Banks in the Gulf are taking advantage of ample liquidity, hence demand, for regional assets, to shore up capital ratios at current cheap borrowing rates.

Healthy demand could allow the borrower to tighten price guidance further ahead of launch. Arranging banks indicated order books for the bond were over US$4 billion in sales update seen by Reuters.

Tier 1 capital is a lender's core capital as defined under the Basel banking industry rules, and a key measure of its financial strength. Gulf banks will need to comply with tighter Basel III global standards for core capital, which will be introduced gradually over coming years.

ENBD's Tier 1 solvency ratio stood at 13.5 per cent of assets at the end of March.

Bank of America Merrill Lynch, Deutsche Bank, HSBC, ING, Morgan Stanley as well as Emirates NBD's investment banking unit are mandated arrangers on the bond.

Abu Dhabi Commercial Bank, another UAE-based bank, also expects to price a benchmark-sized subordinated bond on Wednesday in a swift one-day deal to be arranged by Standard Chartered.

 

* Reuters