EM CEEMEA CREDIT: Emirates Islamic Bank: FV for $ L5Y SLB Sukuk
Sep-16 06:37
(EIBUH; NR/NR/A+)
IPT @ T+125bp FV @ T+100bp
- UAE’s Emirates Islamic Bank (EIB) is in the primary market with a $ L5Y (to 23 March ’31) SLB Sukuk deal, IPT indicated at T+125bp (approx. z+160bp). We sketch our FV considerations @ z+135bp or T+100bp (4.60% yield area).
- We look at the seasoned, secondary EIBUH curve, particularly the Mar30s charting at z+127bp (or 4.50% yield area) and May29 charting at z+116bp (or 4.40% yield area).
- Among comparables, we look at recently issued, seasoned bonds for Sharjah Islamic Bank SIB 5.2 Feb30 charting at z+131bp (or 4.55% yield area). We also look at shorter dated bonds including DIBUH Mar29s charting at z+123bp (or 4.46% yield area) and ADIBUH Nov28 charting at z+92bp (or 4.16% yield area).
- As the third largest Islamic bank in UAE with AED138bn total assets, EIB is wholly owned by Emirates NBD, indirectly owned by the Government of Dubai.
- For reference, Q2 earnings show NFI at AED1.15bn +8% y/y, PBT at AED1bn +8% y/y, NIM at 3.6% and NPF ratio at 2.8% sequentially lower vs 4.0% in previous quarter.
For context, looking at the H1 credit metrics for peer Islamic banks in UAE, we note EIB’s in line profitability, solid asset quality and conservative capital position (see table below).
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