By Elias Al Helou

Sharjah Islamic Bank’s sukuk offering oversubscribed 3 times, raising $1.5 billion

The oversubscription highlighted the bank's financial strength and prudent management

The 5-year sukuk was priced at a 105 bps spread over 5-year U.S. Treasuries, with a 5.25 percent profit rate and a maturity date of July 3, 2029.

Sharjah Islamic Bank (SIB) successfully closed a $500 million sukuk issuance in the international capital markets. The offering received a strong response from global investors, attracting orders that peaked at $1.5 billion, over 3 times the initial target.

Sukuk details and pricing

The 5-year sukuk was further priced at a spread of 105 basis points (bps) over 5-year U.S. Treasuries, bearing a profit rate of 5.25 percent per annum and maturing on July 3, 2029. The bank was able to tighten the pricing by 35 bps from the initial price guidance of 140 bps, reflecting the strong demand from international and Middle Eastern investors.

Investor confidence

Mohamed Abdalla, CEO of Sharjah Islamic Bank, expressed gratitude to all the investors for their confidence in the bank and the sukuk. Additionally, he noted that this was SIB’s ninth issuance in the international capital markets, with the first one dating back to 2006. He highlighted the bank’s financial strength and prudent management, which is reflected in its ratings and transaction pricing.

UAE banking system’s strength

Ahmed Saad, deputy CEO, emphasized the overall strength of the UAE banking system and SIB’s position within it. He further stated that the geographical distribution of the sukuk was a key target, with 80 percent allocated to the Middle East, 13 percent to Asia, and 7 percent to Europe. He noted that the robust interest in the Middle Eastern credit story, particularly in Sharjah Islamic Bank, was very encouraging, despite the volatile market backdrop.

Syndicate of arranging banks

Moreover, the sukuk was arranged by a syndicate of banks, including ENBD Capital, HSBC, and Standard Chartered as Joint Global Coordinators, and Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Bank ABC, Dubai Islamic Bank, ENBD Capital, First Abu Dhabi Bank, HSBC, Mashreq, QNB Capital, and Standard Chartered Bank as Bookrunners.

For more news on banking & finance, click here.