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Our friends at Mashreq drew USD 2.9 bn in orders for their USD 500 mn, five-year sukuk issuance from more than 90 investors, making it 6x oversubscribed and the most heavily subscribed issuance in the bank’s history, the lender said in a statement (pdf). The bank locked in a profit rate of 5.03% per year, with a credit spread of US Treasuries plus 105 basis points, tightened from earlier initial price thoughts of 140 basis points on the back of “substantial demand.”
Who bought in? Investors from the Middle East took 75% of the allocation, with 16% going to Europe and the UK. The rest went to Asia and offshore US accounts. Bank treasuries — Islamic and conventional — accounted for 64% of allocations, with the remainder going to asset managers, insurers, pension funds, and hedge funds.
Investor meetings in London led the bank to accelerate the closing of the issuance due to strong demand, the statement said. The bank went in with “confidence and clarity,” capping the issuance size at USD 500 mn, a move it credits for attracting strong demand.
The issuance — the bank’s first since 2024 — also marks the first public CEEMEA issuance to price since the US announced new trade tariffs on 2 April. It tapped debt markets for a USD 500 mn additional tier 1 issuance last summer, which carried the lowest coupon for AT1 bonds set by a bank in the UAE in the past three years.
The sukuk was issued under Mashreq’s USD 2.5 bn trust certificate program and will list on Euronext Dublin. It carries an A rating from S&P, in line with the bank’s A3/A/A investment-grade profile from Moody’s, S&P, and Fitch.
What they said: “This sukuk issuance underscores the depth of investor confidence in Mashreq’s credit profile, strategy, and long-term fundamentals. The substantial oversubscription, despite ongoing market volatility, is a testament to our standing with global investors and reinforces our disciplined approach to market execution,” our friend and Mashreq’s Group CEO Ahmed Abdelaal said.
ADVISORS- Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Al Rajhi Capital, Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, KFH Capital, Mashreq, Sharjah Islamic Bank, Standard Chartered Bank, and the Islamic Corporation for the Development of the Private Sector acted as joint lead managers and bookrunners.
Zooming out: The UAE’s sukuk and bond markets continued to grow at a steady pace in 1Q, with total outstanding issuances rising 8.3% y-o-y to USD 309.4 bn. The UAE ranked third among emerging markets ( excluding China) in ESG-linked sukuk and bond issuances last quarter, trailing Turkey and the Philippines.
