x Abu Dhabi, UAEFriday 21 July 2017

First Gulf Bank delays $500 million bond issue

First Gulf Bank bides its time on a new bond issuance, saying bond markets have become too choppy in the past week.

First Gulf Bank, Abu Dhabi's third-biggest bank by assets, has announced that it will postpone a $500 million (Dh1.8bn) bond issuance because of market volatility.

This movecasts doubt on trading conditions in a debt market which, until recently, had been seen as increasingly attractive to Gulf companies.

The proposed issuance was a $500m, three-year dated bond which would have paid a coupon of 4 per cent, according to the prospectus.

A bank spokesman said: "The team of advisors took a decision not to go ahead. We'll monitor the market and if conditions improve we'll try to reissue."

John Tofarides, financial analyst at Moody's, expressed surprise at the decision, saying that Gulf banks currently enjoy strong trading conditions to issue bonds.

"I think for the Dubai banks maybe not, but Abu Dhabi banks are better positioned."

He added that First Gulf Bank was not in a worse position on account of its aborted debt issuance.

"The bank is well capitalised and has the means to finance its growth through deposits," he added.