Sharjah Update Sharjah business & Investment News from Invest in Sharjah (Sharjah FDI Office)
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Sharjah Islamic Bank (SIB) issued an unsecured US$ 500 million (AED 1.8b) 5-year Islamic bond or sukuk on Tuesday, which was oversubscribed by more than seven times. According to SIB, the bank’s fourth sukuk received around 120 orders worth US$ 3.6 billion (AED 13 b).
Sharjah Islamic Bank issued its first successful Islamic bond in 2006 and currently has two sukuk, one US$400 million (AED 1.5b) bond maturing in 2016 and a one five-year bond of US$500 million (AED 1.8b), which was also oversubscribed by six times on issue, maturing in 2018. SIB is 30% owned by the government of Sharjah and has positioned itself as an Islamic banking leader with a growing portfolio of Shari’ah-compliant banking products.
Plans for SIB’s fourth sukuk were announced last week as lead arrangers Abu Dhabi Islamic Bank, Al Hilal Bank, Dubai Islamic Bank, Emirates NBD, HSBC, KFH Investment, Noor Bank and Standard Chartered scheduled investor meetings for SIB in Asia and Europe.
Final price guidance for the sukuk was given by lead arrangers on Tuesday at 110 basis points (bps) over midswaps (a benchmark for calculating bids). This pricing guidance is significantly tighter than the 115 bps over midswaps (plus or minus 5bps) guidance provided earlier in the day, due to strong demand.
According to SIB, banks and financial institutions were allocated 59 percent of the sukuk, fund managers 33 percent, while supranationals and central banks bought 6 percent. Investors from the Middle East accounted for 63 percent of sukuk sales, with Asian and European buyers acquiring 23 percent and 14 percent of the bond respectively.
Meanwhile, Moody’s Investors Service assigned a provisional (P)A3 senior unsecured (foreign and local currency) MTN rating with Stable Outlook to the USD3 billion (AED 11 b) Trust Certificates Issuance Program of SIB Sukuk Company III Limited, a special purpose vehicle incorporated for SIB’s US$400 million (AED 1.5b) sukuk issued in 2013.
Sharjah Islamic Bank (SIB) reported a 23 percent increase in year-on-year net profit in 2014, reaching AED 377.2 million (US$103m), compared to AED 307.1 million (US$84m) in 2013 when the bank registered a 12.9 percent increase in net profit.
Global credit rating agency Fitch upgraded Sharjah Islamic Bank’s (SIB) Viability Rating in 2014 to a Long-term IDR at ‘BBB+’ with Stable Outlook, reflecting the bank’s asset quality, combined with strong capital and liquidity ratios.
The launch of the Government of Sharjah’s debut sovereign sukuk, launched at a size of US$750 million (AED 275b) in September 2014, was also met by massive demand from investors.
Updated: 15 March 2015
Sources: SIB, Reuters, media
