Dawn of the Samurai Bond in the Middle East

By: EW News Desk Team   Date: 19 July 2011

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EconomyWatch, News Desk Team

 

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19 July 2011

The National Bank of Abu Dhabi (NBAD) became the first Middle Eastern financial institution to issue a Samurai bond last week when it sold 10 billion yen (US$127 million) of 15-year bonds – with a fixed coupon rate of 2.6 percent.

In a press statement, NBAD said that its issuance of the Samurai bond was part of its strategy to diversify its funding sources while extending its liability profile.

"We are very pleased to again be the market leader from the GCC (Gulf Cooperation Council) in terms of our issuance platform and see this as a major breakthrough. This shows the commitment we have to our well publicised diversification strategy," said Stephen Jordan, senior vice president and general manager of liquidity management and interest rates product group at NBAD's Financial Markets Division, in Gulf News.

By issuing securities issued in yen, NBAD hopes to widen its pool of potential investors, particularly those from Japan.

“Japanese investors are very quality focused,” said Anthony Barklam, the London-based head of debt capital markets origination for central and east Europe, the Middle East and Africa at Mitsubishi UFJ Securities Holdings Co., in an interview with Bloomberg. They “don’t invest to trade the bonds, they invest to hold and get their money back.”

The second largest bank by assets in the United Arab Emirates, NBAD told the press that they were likely to continue its strategy of increasing its global debt platforms. Prior to its issuance of the Samurai bond, NBAD had already issued debt in Hong Kong dollars and Malaysian ringgit. Recently, the company also established a Kangaroo platform for future potential issuance in Australian and New Zealand dollars.

"NBAD will continue on its diversification strategy which will likely provide opportunities for other issuers from the GCC to tap certain markets, especially in Asia," said Jordan.

NBAD's samurai bond will mature in 2026. Mistubishi UFJ Morgan Stanley Securities and HSBC Securities Japan were the joint lead managers of the bond.


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