Strong investor appetite for EDB’s Dh2.75b bond
dh3.5b Order book value reached by EDB’s bonds, with demand from 130+ investors
DUBAI — Emirates Development Bank (EDB) on Saturday announced that it raised $750 million (Dh2.75 billion) through five-year bonds at 3.516 per cent coupon rate and was strongly oversubscribed.
The UAE government-owned lender, which has been rated AAby Fitch, is the first federal entity in the UAE to tap capital markets after the introduction of new debt law issued last year.
The bond was issued under the bank’s $3 billion Euro Medium Term Note programme to provide the bank accessibility to capital markets and further strengthen its funding profile.
The lender had met institutional investors in Abu Dhabi, Dubai, London, Hong Kong, Singapore, Kuala Lumpur and Taipei for the raising of the funds.
Investors showed a strong appetite for EDB’s credit offering, resulting in the order book reaching $3.5 billion — close to 4.7 times oversubscription — with demand from over 130 investors.
The investor base was diverse with 36 per cent representing the Middle East, 22 per cent from European markets, and 42 per cent representing Asian markets, it said in a statement.
The UAE had issued a federal law in 2018 allowing the federal government to issue sovereign bonds for the first time in order to improve banking liquidity. This will also give benefit to each emirate of the UAE from higher federal ratings than they could achieve on their own.
Emirates NBD Capital acted as financial advisor and a joint global coordinator on the transaction, while, Standard Chartered Bank acted as joint global coordinator. Emirates NBD Capital, Industrial and Commercial Bank of China Dubai (DIFC) Branch, Standard Chartered Bank and Union National Bank acted as joint lead managers on the transaction.
“Emirates Development Bank is Supplied photo a key player in the UAE’s financial sector, through its introduction of specialised services to grow the nation’s economy. We are pleased with the strong investor demand and the results of the transaction — highlighting the market’s strong endorsement of EDB’s credit profile. This deal establishes a tightly priced and liquid benchmark for EDB, and formed an important objective as the first federal entity to issue bonds from the UAE,” said Obaid Humaid Al Tayer, UAE Minister of State for Financial Affairs and chairman of EDB.
“The strong investor response to the deal is a testament to Emirates Development Bank’s unique credit story, track record of management and the integral role that Emirates Development Bank plays in the UAE’s financial market,” said Rola Abu Manneh, CEO for the UAE at Standard Chartered Bank.
“As the sole financial advisor and global coordinator, Emirates NBD Capital is delighted to have supported the debut $750 million, five-year bond issuance for Emirates Development Bank. This represents the first debt capital markets issuance by a UAE Federal Issuer. The successful completion of the transaction is a testament to EDB’s strength and its strategic importance to the UAE,” Fahad Al Qassim, CEO of Emirates NBD Capital.
EDB had launched a Dh100 million credit guarantee scheme targeted at small and medium enterprises to support this sector which generally faces challenges in obtaining credit from local banks.