ADCB to issue $1.2bn of bonds in Asia

GROWING OPPORTUNITIES: ADCB plans to issue $1.2 billion worth of bonds in Malaysia and Singapore. (ITP Images)

Abu Dhabi's third-largest bank plans to issue as much as $1.2 billion worth of bonds in Malaysia and Singapore as it looks to tap into growing opportunities in Asia.

Abu Dhabi Commercial Bank (ADCB) agreed in May to pay $1.23 billion for 25 percent of Malaysia's fourth-largest lender RHB Capital in a bid to exploit commercial ties between the Middle East and Asia.

Ratings agency RAM on Wednesday assigned a long-term stable rating of AAA to ADCB Finance (Cayman) Limited, a vehicle for the proposed 3.5 billion ringgit ($1.07 billion) senior unsecured medium-term notes (MTN), it said in a note.

An official at ADCB confirmed the MTN programme, but declined to comment on what the funds would be used for or when the first sale would take place.

The bank will sell Singapore $145 million ($106.1 million) worth of two-year bonds with a coupon of 4.08 percent, a source familiar with the deal who declined to be identified told newswire Reuters earlier on Wednesday.

The fixed rate, semi-annual bond will be settled on June 30, the source said, adding the deal size was raised from S$100 million due to strong demand.

Standard Chartered Bank is the sole bookrunner for the deal.

ADCB is the latest Gulf borrower planning to sell ringgit bonds in Malaysia, in the latest move that highlights the rising cost of borrowing in US dollars.

A global credit crunch triggered by defaults on US home loans has made dollar borrowing more expensive, and bets that Gulf states could allow their dollar-pegged currencies to appreciate to dampen inflation has seen dollar assets fall from favour.

National Bank of Abu Dhabi (NBAD) plans to sell up to $925.6 million in ringgit-denominated bonds, which could include an Islamic tranche.

The Saudi-based Islamic Development Bank plans to sell $1 billion of ringgit-denominated Islamic bonds this year.

Bankers say Gulf firms are trying to diversify their investor base, and that more Islamic banks are looking to raise cash in Malaysia's Islamic bond market, which is more liquid and has a better regulatory framework than local markets.

Shares of ADCB are down almost 4 percent this year, compared with NBAD, up more than 11 percent and First Gulf Bank, which has gained more than 30 percent. (Reuters)

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