FAB board approves up to $1 billion AT1 bonds issuance

Gulf Island Fabrication

28/02/2022 14:20

DUBAI, Feb 28 (Reuters) - The board of First Abu Dhabi Bank
 FAB.AD , the United Arab Emirates' largest lender, approved on
Monday issuance of up to $1 billion in Additional Tier 1 (ATI)
bonds, designed to be perpetual.
    Chaos in world markets following Russia's invasion of
Ukraine have further exacerbated a slow year for bond sales out
of the Gulf, already wary over a more hawkish U.S. Federal
Reserve expected to begin an aggressive tightening cycle in
March.
    AT1 bonds are used to boost banks' core capital to comply
with international banking standards and can be redeemed after a
specified period. 
    The FAB board approved the new issuance at a general meeting
on Monday but did not give details on the timeline.
    FAB already has $750 million in outstanding AT1 sukuk, or
Islamic bonds, which it issued in October 2020.
    That followed its redemption the prior June of $750 million
AT1 bonds, a decision it said at the time it took
"notwithstanding strong economic rationale" not to redeem them.
    FAB tapped the market last week for $500 million senior
unsecured sukuk, becoming only the third dollar-denominated debt
issuance out of the Gulf in February after only three in
January.
    FAB's sukuk sale on Wednesday was the first debt capital
market deal from the Gulf since Feb. 9, when Riyad Bank sold
$750 million AT1 sukuk.
    Banks held investor calls for Boubyan Bank early last week
to market dollar senior unsecured sukuk, but news of the deal
has since fallen silent as the fallout from the war in Ukraine
continues to rattle markets. Russia calls its actions in Ukraine
a "special operation". 

 (Reporting by Hadeel Al Sayegh, Writing by Yousef Saba; Editing
by Emelia Sithole-Matarise)
 ((Yousef.Saba@thomsonreuters.com; +971562166204; https://twitter.com/YousefSaba))