KUWAIT CITY: Warba Bank has established itself as a leading facilitator in Islamic finance through its successful management of two significant sukuk transactions—the USD 300 million perpetual additional Tier 1 capital sukuk for Qatar International Islamic Bank (QIIB) and a USD 150 million tap issuance for Arada Developments in the UAE. These groundbreaking deals reflect Warba Bank’s growing influence in the global sukuk market, signaling a strong investor interest in Shariah-compliant financial instruments.
The Groundbreaking QIIB $300 Mln Sukuk
On September 24th, 2024, Warba Bank played a pivotal role as the Joint Lead Manager and Joint Bookrunner in QIIB’s USD 300 million perpetual sukuk offering. This was no ordinary issuance—it was met with an overwhelming reception from global and regional investors, evidenced by the order book hitting a remarkable USD 2.5 billion, 8.33 times the issuance size. Such substantial oversubscription is a clear sign of the rising confidence in Islamic finance, particularly in QIIB’s financial strength and the value proposition it offers to investors.
To facilitate this landmark deal, Warba Bank joined forces with other major financial institutions, including Al Rayan Investment LLC, Citi, Doha Bank, Dubai Islamic Bank, Dukhan Bank, Emirates NBD Capital, HSBC, Lesha Bank, Mashreq, QNB Capital, and Standard Chartered. The single-day book-building process highlights the market’s robust appetite for high-quality Islamic finance assets, particularly those structured by well-established financial entities.
The Sukuk, structured as “Non-Callable in 5.5 Years,” offers a fixed profit rate of 5.45%. This structure not only provides stability for investors but also enhances QIIB’s capital adequacy. The listing of the sukuk on the International Securities Market (ISM) broadens its appeal to global investors looking for ethical investments that align with Islamic principles.
Arada Developments’ $150 Million Sukuk Tap
Alongside its work with QIIB, Warba Bank has also successfully led a USD 150 million sukuk tap issuance for Arada Developments, a leading real estate developer in the UAE. This tap issuance, which carries a yield of 7.35%, is linked to the existing USD 400 million sukuk initially listed on ISM and Nasdaq Dubai in June 2024, bringing the total issue size to USD 550 million.
The sukuk tap issuance saw considerable demand, generating an order book totaling USD 480 million—more than three times the tap issuance size. As Joint Lead Manager and Bookrunner, Warba Bank partnered with Abu Dhabi Commercial Bank, Dubai Islamic Bank, Emirates NBD Capital, Mashreq, Sharjah Islamic Bank, and Standard Chartered Bank to ensure a smooth and successful transaction. This issuance is not only a testament to the strength of the UAE’s real estate sector but also highlights the growing interest of investors in diversified, Sharia-compliant investment products.
The Global Appeal of Sukuk
The remarkable demand for both the QIIB and Arada sukuk issuances showcases the global market’s enthusiasm for Islamic finance. Over recent years, sukuk has gained traction as a preferred financial instrument for both issuers and investors. The growing demand is part of a broader trend in Islamic finance, which has witnessed a substantial increase in global interest and investment.
In 2023, global sukuk issuance hit an impressive USD 174 billion, according to the Islamic Financial Services Industry Stability Report. This growth highlights the demand for ethical, sustainable, and Shariah-compliant investments across various sectors, including banking, real estate, and infrastructure development. Warba Bank’s successful facilitation of these sukuk transactions underscores its capacity to tap into these trends, offering high-quality Islamic finance solutions that appeal to a diverse global investor base.
Related: London Stock Exchange Marks Warba Bank’s Sustainable Sukuk Issuance
The Role of Warba Bank
Thuwaini Khaled Al-Thuwaini, Chief Investment Banking Officer at Warba Bank, commented on the success of these transactions, highlighting the bank’s dedication to excellence in the Islamic finance sector. “The overwhelming market response to both sukuk issuances underscores Warba Bank’s capabilities and expertise in structuring and leading high-profile Islamic finance deals,” said Al-Thuwaini. “It reflects the market’s confidence in our ability to deliver value through ethical banking, innovative strategies, and robust financial solutions.”
Al-Thuwaini also emphasized the importance of Islamic financial instruments, such as sukuk, in enhancing global capital markets. He noted that the recent transactions serve as clear evidence of the growing demand for Shariah-compliant investments from global investors. Warba Bank’s strategy centers on growth and expansion, with a focus on extending its reach to both institutional and individual investors who seek ethical banking solutions.
The bank has been active in managing high-profile sukuk issuances over the years, enhancing its reputation as a trusted player in the debt capital markets. Warba Bank’s commitment to ethical banking and innovative financial products positions it well to capitalize on the expanding Islamic finance market, which continues to grow in sophistication and appeal.
Investor Base
Both sukuk issuances—QIIB’s perpetual sukuk and Arada’s tap issuance—benefited from strong investor demand, with participation from a diverse range of global and regional institutional investors. This includes banks, asset managers, insurance companies, and sovereign wealth funds, highlighting the widespread appeal of Islamic finance instruments.
One key factor driving investor interest in sukuk is the growing focus on ethical and sustainable investments. Sukuk, being Shariah-compliant, aligns with the principles of responsible and ethical finance, which is increasingly sought after in global markets. Moreover, Sukuk issuances are often backed by real assets, adding to their stability and attractiveness as investment options.
Sukuk and Islamic Finance
The continued success of sukuk issuances like those managed by Warba Bank is a clear indicator of the bright future for Islamic finance. With the Middle East and Southeast Asia leading the way in Sukuk issuance and development, the market is poised for further expansion. The strong demand and successful issuances reflect not just regional growth but also a growing global appetite for Sharia-compliant investments.
Warba Bank’s prominent role in these transactions places it at the forefront of Islamic finance, showcasing its expertise in the debt capital markets. As demand for Islamic finance continues to rise, and as global markets shift towards ethical and sustainable investments, institutions like Warba Bank are well-positioned to drive the sector forward.
The Islamic finance market is not just a regional phenomenon; it has become a global movement that offers an attractive alternative to conventional finance. As more investors and corporations seek financial products that align with ethical principles, sukuk is emerging as a preferred choice. The market’s growth potential remains significant, and financial institutions like Warba Bank are at the core of this dynamic and evolving landscape.
In essence, Warba Bank’s successful facilitation of these sukuk deals demonstrates not only its capabilities as a leader in Islamic finance but also underscores the strong and growing demand for ethical and sustainable investment opportunities around the world. With its strategic focus on innovation and ethical banking, Warba Bank is set to play an integral role in shaping the future of global Islamic finance.
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