IMage: DIB
Dubai Islamic Bank (DIB) has successfully issued a $500m additional tier 1 (AT1) sukuk with a competitive profit rate of 5.25 per cent per annum.
The Basel III-compliant sukuk is expected to enhance the bank’s capital adequacy ratio and further optimise its balance sheet, underscoring DIB’s strong credit fundamentals and robust financial position.
The transaction, executed intraday, attracted substantial interest from a diverse group of investors, including banks, private banks, and fund managers from Europe, Asia, and the Middle East.
The sukuk, which was priced with a reset spread of 133.4 basis points (bps) over the US Treasury rate, marked the lowest spread for an AT1 instrument globally since the 2009 financial crisis.
Duba Islamic Bank sets profit rate to 5.25 per cent from 5.75 per cent
The bank initially set the profit rate at 5.75 per cent but, due to high demand, was able to tighten pricing to 5.25 per cent, highlighting strong investor appetite for the sukuk.
Dr Adnan Chilwan, group CEO of DIB, commented on the successful transaction: “We are very pleased with this successful execution in the international capital markets. The transaction represents the lowest yield achieved by an emerging market bank since April 2022. It reflects the strong confidence placed by both international and regional investors in DIB’s strategy, credit story, and overall financial health.
“This deal also showcases the large investor base that the UAE enjoys, and I want to express my gratitude to both our loyal investors and new participants for their continuous support.”
DIB said the sukuk would be dual-listed on Euronext Dublin and NASDAQ Dubai, ensuring broad visibility and liquidity in the international capital markets.
The proceeds from the sukuk will be used to strengthen the bank’s Tier 1 capital base, which supports its lending activities and future growth strategies.
The issuance is part of DIB’s ongoing efforts to diversify its funding sources and maintain a strong capital position in alignment with Basel III requirements.
