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First Gulf Bank (FGB), one of the major leading banks in the UAE, hasissuedUSD 500 million 5-year Bonds under its USD 3.5 billion Euro Medium Term Note (EMTN) programme.The transactiontook place on November 5th, registering a final price for the bonds at 180 basis points above interpolated midswaps (bps),. The bonds are setto mature in 2019.
The bonds have a long-term rating of ’A+’ by Fitch and ‘A2’ by Moody’s,with a stable outlook considered for both. The EMTN Bonds are listed in London with couponsat a fixed interest rate of 3.25% p.a. The transaction set the final price for the five-year bonds at 180 basis points above interpolatedmidswaps (bps), lower than previous spreads of 287.5bp and 210bp for FGB’s January 2012 Sukuk issuanceand its October 2012 EMTN transactions respectively.
FGB’s bonds have received highly positive endorsement from its investors, who registered a total oversubscription of 2.8 times, accumulating an order-book of USD 1.4billion. The book was driven by broad demand across many regions, with allocations of 59% to Middle East investors, 34% to European investors and 7% to Asian investors. In terms of allocation by investor type, 51% of the transaction was allocated to fund managers, 30% to banks, and 17% to private banks.
Commenting on the transaction, Andre’ Sayegh, CEO of First Gulf Bank said: “Once again, the market has shown a high level of confidence in First Gulf Bank. The final price of the transaction is the lowest we have achieved to date for our bond issuances, which is due to the bank’s consistently strong financial performance, expansion activities and solid ratings, which have led to deeper global trust in our operations.”
The transaction was jointly led byBank of America Merrill Lynch, Citigroup, Deutsche Bank and HSBC Holdings.Proceeds from these bondswill be used by FGBto contribute towards its medium term funding plan.
In October 2012, FGB receivedan overwhelming endorsement from investors for its USD 650 million 5-year EMTN bonds,at a total subscribed value of more than USD 2.7 bn.In November 2009, under the same ongoing programme, FGB raised USD 500millionin senior unsecured three-year notes, while in January 2011, the bank also issued five-year 200million Swiss franc (USD 206million) in notes.
In addition, the bank alsohas had two highly successful issuances of Sukuk (Islamic bonds):USD 650millionin July2011 and USD 500millionin January 2012.Both were oversubscribed many times over.
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