KFH Capital arranges US$ 1bn Sukuk for Dubai Islamic Bank
KUWAIT: Chief Investment Banking Officer of KFH Capital, investment arm of KFH Group “KFH”, Abdullah Al-Haddad said that KFH Capital has succeeded in arranging the issuance of US$ 1 Billion Sukuk for Dubai Islamic Bank. As one of the lead arranger, KFH arranged the sukuk issuance of Dubai Islamic Bank’s US$ 5 Billion Sukuk program. This step has reiterates KFH Group’s pioneering role in the
Sukuk market, and establishes sukuk as a vital source of finance for governments and companies.
Al-Haddad indicated in a press release that KFH Capital has arranged the Sukuk transaction in cooperation with 7 Global Banks. This issuance is expected to be rated at A3 by Moody’s and A by Fitch. The Sukuk tenor will be 5 years with a return of 3.625%. The sukuk is based on the Wakala structure and shall be listed on the Irish Stock Exchange and NASDAQ Dubai. Issuance was priced at 115 bps above the five year benchmark rate.
Issuance marketing started at 130 bps levels and narrowed to 115bps as the order book started building up. Subscription to the issuance was approximately US$ 1.75 Billion, i.e. an increase by 75% over the issuance amount with orders from more than 115 investors, mainly from the Middle East. The tremendous demand on this sukuk issuance reflects great trust investors place in Dubai Islamic Bank, and KFH Capital’s capabilities to manage the issuance process. It also reflects investors’ interest in Sukuk in general and GCC Sukuk in particular.
Al-Haddad emphasized that the initial trend of the sukuk market this year indicates that the issuance trend is expected to continue favorable in Q1 of this year due to increased interest and trust by companies and governments who have expressed their interest in the Sukuk product as a premier finance instrument. It is expected that there will be an increased momentum in the sukuk market considering many countries considering exploring this route in addition to corporate and financial institutions to cover their finance needs.
Al-Haddad reiterated that KFH Group plays a leading role in the Islamic Finance Sector by innovating new Islamic products and services which are introduced as an alternative for traditional banking products. Meanwhile, these instruments target to play a more significant role in financing development plans in the region and in global markets. Accordingly, KFH Group is recognized as the pioneer in Islamic Finance who has paved the way for an established industry that includes sukuks as the main product. He indicated that the vast experience of KFH Group in the Sukuk issuance has positioned it as a trustworthy and highly recognized organization by major corporates and governments globally. The various structures used by KFH Group in arranging sukuks, be it Ijara, Wakala or others, have made sukuk to be highly competitive against traditional finance instruments