Sharjah Islamic Bank (SIB), a leading shariah-compliant commercial bank, begins a global round of investor meetings this week to secure subscribers for a benchmark U.S. dollar Islamic bond issue or sukuk, according to a notice from the bank to shareholders. ‘Benchmark’, in this context, normally refers to a bond issue of at least US$ 500 million (AED 1.8b) in size.
The bank is expected to hold investor meetings in Asia, Europe and the Middle East, prior to a potential sukuk issue, subject to market conditions and investor response. SIB has appointed nine lead arrangers for the issue: Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, HSBC, KFH Capital, Maybank, Noor Bank, QNB Capital and Standard Chartered.
SIB issued an unsecured US$ 500 million (AED 1.8b) 5-year sukuk in March 2015, which was reportedly oversubscribed by more than seven times. The bank issued its first successful Islamic bond in 2006 and, in May 2016, announced that it had successfully repaid its US$ 400 million sukuk issued in 2011. The bank now has two current sukuk’s: a five-year US$500 million (AED 1.8b) bond, which will mature in 2018 and the bond issued in 2015 (maturing in 2020). According to bank announcements, funds raised under the sukuks are generally used for general corporate purposes and business expansion.
SIB is the 15th largest Islamic bank in the GCC, ranked by assets(1). The bank recently announced a 25.6 percent increase in net profit for the first six months of 2016, posting AED 257 million (US$ 70m) net profit, compared to AED 204.6 million (US$ 56m) during the same period in 2015. The bank’s total assets were calculated as AED 29.8 billion (c. US$ 8b) at the end of H1 2016, similar to the AED 29.9 billion (c. US$ 8b) held at the end of 2015.
Sharjah Islamic Bank is rated at A3 by credit rating agency Moody’s Investor Services, and BBB+ by Standard & Poor’s, Fitch and Capital Intelligence Ratings (CI Ratings), with stable outlook rating from all agencies. 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 ands services.
The Government of Sharjah issued a five-year US$500 million (AED 1.8b) Islamic bond in January 2016, the first sovereign sukuk to be issued globally in 2016.
According to Thomson Reuters, sukuk issues during 2016 are currently slightly below 2015 levels, but are expected to reach around US$70 billion by the end of year, similar to the $66 billion of Islamic bonds issued globally during 2015.
Source: SIB, MEED(1), various