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Tuesday, July 27, 2021

Dukhan Bank sells $500 million in Islamic bonds

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Qatar’s Dukhan Bank debt sale comes at a time when regional banks have looked to strengthen their primary funding sources. 

Qatar’s Dukhan Bank has sold $500 million in Additional Tier 1 (AT1) sukuk, or Islamic bonds on Wednesday, according to a document.

The permanent Islamic bonds were tightened from the initial price guidance of around 4.375% to 3.95%, the lowest rate for this type of issuance in the Qatari market.

AT1 bonds are designed to be perpetual, meaning they do not carry any maturity date as bonds usually do, but issuers can call them in after a specified period. Dukhan’s sukuk bonds cannot be redeemed or paid off for 5-1/2 years.

Citi, Credit Suisse, JPMorgan, KFH Capital, QInvest, QNB Capital, and Societe Generale arranged the Dukhan Bank deal.

“We are very pleased with the success achieved by the issuance of this Sukuk which follows alongside significant investor demand. This is yet further evidence of the Qatari economy’s distinguished position,” said Chairman and Managing Director of Dukhan Bank, Sheikh Mohammed bin Hamad bin Jassim Al Thani.

The issuance is among Dukhan Bank’s efforts to expand its banking products and financial services in order to bolster its position in the Islamic banking sector.

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Dukhan’s debt sale comes against the backdrop of  a steady stream of AT1 issuances from banks in the Gulf.

With sufficient liquidity, banks have aimed to strengthen their Tier 1 capital, the capital adequacy of a bank.

Last month saw regional AT1 sales from Saudi Arabia’s Bank AlJazira, Kuwait Finance House and Kuwait’s Ahli United Bank.


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