Emirates Islamic, a leading Islamic financial institution in the UAE, has successfully priced a ground-breaking $500 million Sustainability-Linked Financing Sukuk. This landmark issuance, a global first of its kind, highlights the growing convergence of Islamic finance and sustainable investing, drawing significant interest from international markets and reinforcing the UAE’s position as a hub for financial innovation.
Pioneering Sustainable Islamic Finance
The issuance marks a significant milestone as the first-ever Sustainability-Linked Financing Sukuk in the world. This innovative financial instrument directly links the issuer’s sustainability performance to its financing terms, demonstrating Emirates Islamic’s commitment to embedding ESG principles into its core strategy. The proceeds are set to fund a range of general corporate purpose projects under the bank’s Sustainability-Linked Financing Sukuk Framework, which has been verified by ISS-Corporate to be in alignment with international best practices.
Strong Global Investor Confidence
The Sukuk was met with robust demand from the global investment community, with the order book reaching $1.2 billion, representing a 2.4 times oversubscription. This strong appetite underscores the market’s confidence in both Emirates Islamic’s A+ credit rating and the UAE’s economic stability. The investor base was geographically diverse, with 83% from the Middle East, 10% from Europe, and 5% from Asia, showcasing the broad appeal of this novel Shariah-compliant sustainable investment vehicle.
Favourable Pricing and Allocation
The high demand allowed Emirates Islamic to achieve competitive pricing, compressing the spread to 95 basis points over 5-year US Treasuries, resulting in a profit rate of 4.540% per annum. The allocation of the Sukuk reflects its appeal to institutional investors, with 75% going to banks and private banks, 20% to fund managers, and the remaining 5% to investment funds, public funds, and Sovereign Wealth Funds. The Sukuk was issued under the bank’s existing $4 billion programme and is listed on both Nasdaq Dubai and the Euronext Dublin stock exchange.
About Emirates Islamic
Emirates Islamic, part of the Emirates NBD Group, is a prominent Islamic financial institution in the UAE. Established in 2004, the bank provides a comprehensive range of Shariah-compliant products and services across personal, business, and corporate banking. With a network of 40 branches across the UAE, Emirates Islamic is also a recognized innovator in digital banking, being the first Islamic bank in the country to launch a mobile banking app and Apple Pay. The bank is consistently awarded for its performance and innovation in the Islamic finance sector.
Source: Zawya
