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Wed 14 Jul 2010 10:13 PM

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Abu Dhabi Islamic Bank prepares for bond issuance

Capital market bankers are actively pitching ADIB to arrange a sukuk issue.

Abu Dhabi Islamic Bank prepares for bond issuance
NO PLANS: UAEs Abu Dhabi Islamic Bank said that it had no immediate plans to issue Islamic bonds, despite refreshing a $5bn sukuk programme. (Getty Images)

UAE lender Abu Dhabi Islamic Bank (ADIB) said it has no "immediate" plans to issue Islamic bonds even though it last week refreshed a $5 billion sukuk programme first mooted in 2006.

In an emailed response to questions from Reuters, the bank said: "We, at this stage, have no immediate plans for sukuk issuance. We will monitor the market and may look into issuance on an opportunistic basis."

Nevertheless capital markets bankers said they are seeking mandates from lenders in the region, and that ADIB is on the list.

ADIB has not said what it might use any new funds for, but banks in the UAE have suffered from substantial exposure to bad loans, particularly from the region wide real estate slump which hit cities likes Dubai hard.

Some banks booked record provisions in 2009 as a result.

The statement added that the update to the sukuk programme was "in line with market practice" and related to an existing $5 billion notes programme launched in 2006. It has yet to sell any bonds under the programme, the bank's spokeswoman said on Wednesday.

Raising funds through bond sales is an option being considered by several banks in the UAE, but only one bank, National Bank of Abu Dhabi has been able to issue bonds so far this year.

A source within the industry said capital markets bankers have been pitching actively to ADIB for a mandate to arrange a sukuk issue.

Abu Dhabi based banks are perceived to have weathered the financial slowdown better than lenders in neighbouring Dubai, where debt troubles continue to weigh.

Dubai's Mashreq and National Bank of Ras al Khaimah have raised the limits on their bond programmes but have not yet disclosed any intention to issue.

EFG Hermes estimates ADIB's second quarter profit to jump 30 percent in a Reuters poll. (Reuters)

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