x Abu Dhabi, UAEMonday 22 January 2018

NBAD in Dh2.7bn bond sale

In a rare move for a Gulf bank, National Bank of Abu Dhabi sells $750m of bonds in the middle of Ramadan - benefiting from its strong credit rating to generate high demand.

National Bank of Abu Dhabi has raised US$750 million (Dh2.75bn) in a bond sale, a rare move for an Arabian Gulf company during the traditionally quiet Ramadan period.

The bank appointed itself alongside Citigroup, JPMorgan and Standard Chartered as bookrunners for the sale of seven-year bonds.

The sale priced at 180 basis points over midswaps, according to a term sheet. Reuters reported order books for the bond were as high as $4.5bn.

The bond sale was surprising in that it came during the middle of Ramadan, when many Gulf investors are usually out of the region, said Shabbir Malik, a financial analyst at EFG Hermes.

"NBAD stands ahead of the other UAE banks in its credit rating - there's no doubt about the quality of its loan book. The bank has a very strong capital ratio and it's supported by the Government as well," he said.

"These factors contribute to its strong credit rating and allow it to raise debt whenever it would like to," he added.

"I'm sure there are investors outside of the UAE who would be willing to take NBAD's risk at the moment."

NBAD was left positioned with one of the highest credit ratings among the banking sector worldwide after Moody's Investors Service downgraded a slew of global investment banks in June. The bank's shares were unchanged in trading yesterday at Dh8.52. Gulf borrowers have raised $26.2bn of funds through bond sales so far this year with sukuk sales recording their strongest year in the region on record.

Government bonds sold by the US and the few European countries that retain an investment-grade credit rating have recently started paying negative yields, resulting in investors effectively paying to lend money to governments instead of receiving interest. Buyers seeking returns above prevailing inflation rates have sought to invest more in the Gulf recently with Qatar's $4bn sukuk last month six times oversubscribed.