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Business Home > Archive
 
Emirates NBD eyes 
five-year dollar bonds

Issac John / 22 March 2012

DUBAI - Emirates NBD, the UAE’s biggest bank by assets, said on Wednesday that it has picked banks to arrange a new five-year dollar bond.

The bank is reportedly planning a benchmark-sized deal, normally understood to be at least $500 million.

The bank said it had mandated Bank of America, Merrill Lynch, Deutsche Bank, Emirates NBD Capital, HSBC and NBAD, as joint lead managers and joint book runners for the US dollar Regulation S transaction. The bond would be issued under Emirates NBD’s $7.5 billion programme.

“The issue is expected to be launched in the near future subject to market conditions,” the bank said in a statement.

The latest issue would be Emirates NBD’s third tap of global debt markets this year. Its Islamic subsidiary EIB sold a $500 million sukuk in January followed by the bank’s one billion three-year yuan issue earlier this month, the first for a regional borrower. The sukuks were priced to yield 350 basis points over the mid-swap rate.

Initial guidance for the latest bond was given in the area of 337.5 basis points over midswaps.

The bank, 55.6 per cent government-owned through the Investment Corporation of Dubai, took over Dubai Bank.

Following this, the bank reported a significant decline in profitability as a result of higher provisioning and is said to be in the process of cutting 15 percent of its workforce.

Emirates NBD follows other Middle East banks in tapping international bond markets to take advantage of lower borrowing costs. Earlier this week, National Bank of Abu Dhabi, UAE’s second-biggest bank, wrapped up a $750 million five-year bond issue within one day, sensing a suitable window of opportunity. Commercial Bank of Qatar plans to meet with investors starting today for a possible sale of benchmark-sized dollar notes.

Emirates NBD has Dh8.47 billion of debt due in 2012 and will “target raising medium- to long-term funding at acceptable pricing,” Chief Executive Officer Rick Pudner said last month.

Emirates NBD’s new bonds will yield about 4.79 per cent, according to Bloomberg calculations. Five-year US swaps were at 1.41 per cent as of 9:34am in New York.

The lender raised 1 billion yuan ($158 million) earlier this month from the sale of a three-year Dim Sum notes, the first such offering from the Middle East. The notes were priced to yield 4.875 percent. Its Emirates Islamic Bank PJSC unit sold $500 million of five-year Islamic bonds in January that were priced to yield 350 basis points over the mid-swap rate.

Emirates NBD’s profit rose eight per cent in 2011 to Dh2.53 billion. The bank is reportedly planning to cut its workforce by up to 15 per cent or by about 700 people as part of a plan to reduce costs.

issacjohn@khaleejtimes.com

 

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