Foreign appetite for UAE debt holds firm as SIB’s AED 2.59 bn rights issue is 3.2x oversubscribed

ADX-listed Sharjah Islamic Bank (SIB) closed its AED 2.59 bn rights issue 3.2x oversubscribed, with total demand hitting AED 8.3 bn, according to a press release. While the Sharjah government subscribed in full to its prescribed share of the rights issue, the remaining shares were oversubscribed 4.5x, with foreign investors driving the bulk of appetite, accounting for 55% of overall demand.

Why this matters: This is the UAE’s first major equity capital raise since the beginning of the war — and the oversubscription rate suggests that the “risk-off” sentiment that spooked foreign investors in March is fading as they look past temporary shocks and return to UAE assets. UAE capital markets have seen a confidence rally over the past few weeks after a quieter spell last quarter, somewhat recovering from the USD 120 bn in foreign outflows seen earlier in the conflict — though not completely. The ADX is still down 7% compared to pre-war levels, while the DFM is down around 11%.

The SIB issue fits within a broader pattern of recovering market activity. Emirates NBD opened the regional AT1 market in late April with a USD 750 mn issuance that priced 50 bps tighter than initial guidance and was more than 3x oversubscribed, drawing demand from the Middle East, Asia, Europe, and the UK. First Abu Dhabi Bank followed earlier this week with a USD 700 mn sukuk that priced 30 bps tighter than initial guidance and was 2x covered.

What’s next for SIB? The issuance will lift the bank’s share capital by 33.3%, bringing it to AED 4.31 bn. As we’ve noted previously, the proceeds are earmarked to strengthen capital buffers and support asset growth.

ADVISORS- Emirates NBD Capital acted as lead manager, while Emirates NBD Bank served as lead receiving bank. SIB was the receiving bank.