UPDATE 2-Dubai Bank plans $5 bln Islamic bond programme
(Recasts, adds CEO comments, details)
By John Irish
DUBAI, Sept 24 (Reuters) - Dubai Bank plans to sell about $500 million in Islamic bonds this year as part of a $5 billion notes programme to finance growth as it looks to become a global Islamic lender by 2013.
The unlisted bank, a unit of Dubai Banking Group (DBG), could sell its first tranche in the next "couple of months", depending on market conditions, Chief Executive Officer Salaam al-Shaksy told Reuters on Wednesday.
The Islamic lender, which appointed Swiss investment bank UBS and Standard Chartered as lead arrangers, had received a good response from potential investors for the sukuk sale, Shaksy said.
"We are talking about an Islamic bank sukuk, which has not been issued for quite some time," Shaksy said when asked whether he was concerned about difficulties in the regional debt markets.
The Islamic bonds, or sukuk, would be listed on the London Stock Exchange and the Dubai International Financial Exchange, the lender said in an earlier statement.
"This is a historic milestone for Dubai Bank, as we prepare to fund an aggressive plan for growth ... in retail and corporate sharia-compliant banking services," Shaksy said.
Shaksy said the first tranche would be used to finance some of the asset growth in the bank. The bank was also considering Islamic loans in addition to the bond programme.
"The first tranche will depend on market conditions ... hopefully in the next couple of months and will probably be about half a billion dollars," he said.
Islamic bonds comply with Islam's ban on lending on interest. Bondholders are instead paid returns derived from underlying assets, such as rent from real estate.
Dubai Bank's decision to sell sukuk comes at a time when the malaise infecting conventional markets may be spreading to the Islamic finance market, which until now has been relatively shielded from the effects of the slowing global economy.
Defaults on U.S. home loans and the ensuing credit squeeze have raised borrowing costs, prompting many Gulf borrowers to shelve bond sales as banks became more reluctant to lend.
GLOBAL ISLAMIC LENDER
Dubai Banking Group, a unit of Dubai Holding, which is owned by the ruler of Dubai, has a 40 percent stake in Bank Islam, Malaysia's oldest and largest Islamic bank. It also has a 40 percent stake in ACR Re-Takaful Holdings, the world's largest reinsurance company.
Shaksy said on Sept. 18 that the group was negotiating bank opportunities in Indonesia and was close to securing partnerships and licences in Senegal and Nigeria, as it looks to become the world's largest Islamic financial services company by 2015.
Dubai's government, ruler Sheikh Mohammed bin Rashid al-Maktoum and 15 other individuals put 3.16 billion dirhams ($860.6 million) into group affiliate Noor Islamic Bank in 2007 and the bank has also set a five-year target to become the largest Islamic lender.
Fitch Ratings and Moody's Investors Service rated Dubai Bank's sukuk issuance programme at long-term 'A' and A3/Prime-2 respectively, Elshall said in the statement.
Emaar Properties (EMAR.DU), the Arab world's largest real estate developer by market value, holds a 30 percent stake in DBG. (Reporting by John Irish; Editing by David Holmes and Simon Jessop)
- Tweet this
- Share this
- Digg this