UPDATE 1-Abu Dhabi bank prices 5-yr sukuk at 4.75 pct-bankers

* Sukuk oversubscribed 3.6 times

* Sukuk to tap the world's biggest Islamic bond market

* Sale one of few sukuks from Middle Eastern issuers (Updates with detail, background)

KUALA LUMPUR/ABU DHABI, June 22 (Reuters) - National Bank of Abu Dhabi NBAD.AD has priced its 500 million ringgit ($156.9 million) five-year sukuk at 4.75 percent, bankers said, as the bank taps investors in the world's biggest Islamic bond market.

The sale is one of a handful from Middle Eastern issuers as the region struggles to recover from Dubai's debt restructuring and several high profile sukuk defaults which have rattled investor confidence.

The sukuk, which is being sold in Malaysia, was oversubscribed 3.6 times, said state-owned NBAD, the second largest bank in the United Arab Emirates by assets.

Malaysia has the world's largest sukuk market, accounting for 42 percent of total global sukuk issuance of $19.1 billion last year, Thomson Reuters data showed.

Funds accounted for 48.3 percent of investors, insurance companies 21 percent, financial institutions 19.9 percent, government agencies 8.6 percent and corporates 2.2 percent, joint lead manager HSBC said.

"NBAD is in the best position among banks in the region to get appetite from investors because of the very low risk profile of the bank," said Sofia El Boury, assistant vice president of research at Shuaa Capital.

"In terms of debt, for NBAD the range has been between 3.5 to 5.9 percent and anything between this bracket is good for NBAD."

Royal Bank of Scotland (RBS.L) and the investment banking arm of Malaysia's top lender Malayan Banking (MBBM.KL) are also handling the deal.

NBAD said the sale would help diversify its sources of funding.

"We believe this will now open the door for other issuers from our part of the world to tap this unique liquidity pool and strengthen further links that are established with Asian investor base," an NBAD spokesman told Reuters.

NABD was one of five lenders which was recently awarded commercial banking licences by Malaysia's central bank. [ID:nSGE65G0AU]

The bank, rated 'A plus' by Standard & Poor's and 'Aa3' by Moody's, recently launched a $5 billion euro medium term note programme in the Middle East. [ID:nLDE65F1ZU]

But few foreign issuers have tapped the Malaysian ringgit bond market over the years. In 2008, Gulf Investment Corp and Export-Import Bank of Korea each sold 1 billion ringgit of bonds in the Southeast Asian country.

Large sukuk deals have been scarce so far this year but recent sales have drawn strong demand. Last month, the Malaysian government sold $1.25 billion worth of 5-year sukuk at par with a yield spread of 180 basis points over U.S. Treasuries. [ID:nSGE64Q03M]

Saudi Electricity Co 5110.SE raised 7 billion riyals from 7-year sukuk, at 95 basis points above Saudi Interbank Offered Rate (Sibor) in May, below the 160 bps above Sibor at which the Gulf's largest power utility priced its previous sukuk issue of the same size. [ID:nLDE6490QZ] ($1=3.186 Malaysian Ringgit) (Click on [ID:nISLAMIC] for more Islamic finance stories and ISLAMIC for a speed guide) (Reporting by Liau Y-Sing in Kuala Lumpur, Stanley Carvalho in Abu Dhabi and Shaheen Pasha in Dubai; Editing by Louise Heavens)