Dubai Islamic Bank (DIB) has postponed a planned issuance of US dollar-denominated sukuk due to market conditions resulting from the new coronavirus outbreak, three sources familiar with the matter said. DIB, the largest Islamic bank in the United Arab Emirates, hired banks to arrange the Islamic bonds last month, a document showed on February 20.
It was planning to raise the financing - likely to be $750 million - on February 26, but decided to wait for better market conditions, said one of the sources. DIB did not immediately return a request for comment. The potential deal received a good response from investors while it was being marketed, but volatility in the debt markets as the coronavirus outbreak intensifies would have increased the sukuk profit rate, said the source.
DIB has hired a group of banks including Emirates NBD Capital, First Abu Dhabi Bank, HSBC and Standard Chartered to arrange the deal. Fund managers have said a rise in regional bond spreads since the beginning of the year suggests the impact of the virus outbreak on global economic growth may translate into higher funding costs for Middle East debt issuers, potentially curbing new borrowing. The cost of insuring against sovereign debt defaults by Gulf Arab states has also recently risen.
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