FAB, Mashreq and DP World are returning to debt markets as spreads stay wider than pre-war levels

Three of the UAE’s biggest borrowers are in the market for USD bonds — the clearest sign yet of a post-summer debt rush. First Abu Dhabi Bank (FAB) and Mashreq are both in the market for five-year USD bonds today in the first real test of demand since the summer lull. FAB launched its issuance with initial price talk at T+115bp under its USD 30 bn EMTN program, while Mashreq mandated banks for a Reg S senior unsecured issuance off its USD 5 bn EMTN shelf, rated A (Fitch), A3 (Moody's), and A (S&P). Meanwhile, DP World mandated a global investor roadshow for a dual-tranche issuance — EUR-denominated green notes alongside conventional USD notes, rated Baa2 (Moody's) and BBB+ (Fitch), both stable.

FAB’s opening spread lands almost exactly on the UAE corporate USD curve — 115 bps over Treasuries as of 21 August, according to a Fitch report shared with EnterpriseAM earlier — which is wider than where it sat at the war's peak in March (108 bps) and nearly 50% wider than in January (79 bps).

Why it matters: Two banks and a ports-and-logistics major are returning to debt markets despite a pricing premium that might move again in the next couple of weeks. Franklin Templeton's Mohieddine Kronfol has argued that the widening is a US Treasury story, not a Gulf credit story, and the US Federal Reserve’s 16 September rate decision will move the Treasury leg of that spread regardless of what happens in the region. Mashreq Capital's Amol Shitole also recently said Gulf spreads are still too tight given the risk on the table — he puts fair value 25-50 bps wider than where they're trading.

It's also a shift in instrument for Mashreq. Its only two market outings this year — a USD 500 mn AT1 in February priced at 6.25% and another USD 500 mn AT1 in July at 6.625% — were both subordinated capital notes. A senior unsecured bond sits higher in the repayment stack and should price well inside those coupons.

REMEMBER- Dubai Islamic Bank also closed its debut syndicated Islamic facility — a USD 750 mn three-year murabaha loan, 1.6x oversubscribed — last week, becoming the first local bank to return to debt markets — albeit syndicated — in over a month. UAE issuers sold a record USD 30.3 bn of international bonds through end-July, and Fitch expects the pace to hold through 2H 2026.

What's next: We’ll be watching for the final pricing on the issuances to see how much — if at all — books tighten from IPTs; a big oversubscription would suggest investors are more sanguine about UAE risk than the spread level implies.

ADVISORS- Arab Bank, BofA Securities, Citi, FAB, HSBC, and ICBC Standard Bank are running FAB's book as joint lead managers and bookrunners, with Citi as billing and delivery bank. As for Mashreq: Abu Dhabi Commercial Bank, ANZ, Barclays, BBVA, BofA Securities, Emirates NBD Capital, FAB, ICBC, Mashreq, MUFG, Societe Generale, and Standard Chartered were mandated to run investor calls as of yesterday.