Emirates NBD shelves plans for Sukuk sale

UAE: Emirates NBD (ENBD) has reportedly shelved plans to issue a five-year Sukuk, which had originally been expected to come to market as early as the third week of December. The bank had been in talks with several banks to manage the transaction, although it had yet to mandate any. It has since emerged that the bank will not proceed with any plans for the issuance, with its subsidiary, Emirates Islamic Bank (EIB), now said to be looking at issuing the Islamic bonds.

EIB is reportedly eyeing a roadshow for a Sukuk next year depending on market conditions, with a sale hinging on investor appetite. Rick Pudner, the CEO of ENBD, earlier said that the bank was considering issuing a five-year US dollar-denominated Sukuk, with the final decision on its funding options to be made within the first two weeks of December.

Although the emergence of its decision is consistent with this timeframe, it also coincides with weak investor sentiment for the bank's shares, which are listed on the Dubai Financial Market, following a report from Goldman Sachs that the bank may need to book up to AED8 billion (US$2.1 billion)-worth of provisions for bad debt by the end of 2013. The report calculated a provisioning of between AED6 billion (US$1.6 billion) and AED8 billion between the fourth quarter of this year and the fourth quarter of 2013.

The bank, already one of the largest creditors to Dubai World, took over the troubled Dubai Bank in October this year, shortly after the Islamic bank was bailed out by the Dubai government.

Plagued with poor asset quality and weak investor sentiment, ENBD's decision to call off its Sukuk issuance may just have circumvented possible poor demand for its papers.

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