FAB, Burjeel rush through UAE’s reopened debt window

The UAE’s debt rush is gathering pace as borrowers lock in funding while spreads recover from their war-era widening. First Abu Dhabi Bank (FAB) is marketing fresh Tier 2 securities days after a heavily subscribed green-bond sale, while Burjeel Holdings is reviving its debut sukuk after shelving the transaction when the war hit markets.

Up first: FAB is marketing a benchmark-sized USD Reg S Tier 2 issuance at around 170 bps over US Treasuries, Zawya reports. The 10.5-year notes are non-callable for 5.5 years, mature in December 2036, and are due to settle on 30 June.

Under the hood: The coupon will remain fixed until December 2031, then reset to the five-year US Treasury rate plus a margin. The notes are expected to be rated A by Fitch and will be listed in London.

The UAE’s largest lender by assets is coming back quickly: Last week, more than EUR 1.1 bn of orders helped FAB price a EUR 750 mn green bond at 74 bps over mid-swaps, tightening from an initial guidance of 100-105 bps. The bank also raised USD 700 mn through a five-year sukuk in May.

#2- ADX-listed healthcare provider Burjeel is finally moving ahead with its debut sukuk, marketing a benchmark-sized five-year Reg S senior unsecured issuance under a USD 1.5 bn trust-certificate program after investor calls began yesterday, the company said in a press release (pdf).

Proceeds will go toward refinancing and general corporate purposes, with the structure split between 55% ijara and 45% murabaha, Zawya reports. The sukuk will be listed on the London Stock Exchange’s International Securities Market.

Rated by S&P, Moody’s: Burjeel earned a BB+ issuer credit rating from S&P with a stable outlook, while Moody’s assigned the firm a Ba2 corporate family rating with a stable outlook.

The comeback matters: Burjeel paused the transaction in April after the war pushed spreads wider, having begun meeting investors in February. Its return now offers another sign that issuers see the funding window reopening.

ADVISORS- ADCB, Citi, Emirates NBD Capital, FAB, JPMorgan, and Standard Chartered are lead managers and bookrunners for FAB’s issuance. Citi, Emirates NBD Capital, and FAB are global coordinators for Burjeel, joined by our friends at Mashreq, along with ADCB, ADIB, Ajman Bank, DIB, KFH Capital, Rakbank, and Sharjah Islamic Bank as bookrunners. Emirates NBD Capital and FAB are also structuring banks.

Zoom out

Gulf borrowers are seizing on a calmer window: Dubai Islamic Bank has also tapped markets twice this month, including through a USD 1 bn AT1 sukuk, as issuers fund opportunistically rather than wait for regional uncertainty to clear.

Spreads have tightened significantly back to pre-war levels for investment-grade names, experts told us previously. However, banking and real estate firms’ spreads are still currently wider than pre-war levels. Strong demand for new transactions is also pointing to investor receptiveness to the issuances, they told us.