Dubai-listed Mashreqbank has appointed a group of leading banks to oversee a $500 million five-year senior unsecured sukuk offering, marking a significant move in the region’s Islamic finance sector. The sukuk, which will be governed by market conditions, is part of the bank’s broader $2.5 billion trust certificate issuance programme.
The issuance will be rated A3 by Moody’s and A by both S&P and Fitch, with a stable outlook from all three major credit rating agencies. The sukuk’s structure, as a senior unsecured bond, suggests Mashreqbank is positioning itself to attract both Islamic and conventional investors in the global market.
A consortium of banks, including ADCB, ADIB, Al Rajhi Capital, Bank ABC, DIB, Emirates NBD Capital, KFH Capital, Mashreq, Sharjah Islamic Bank, Standard Chartered Bank, and the Islamic Corporation for the Development of the Private Sector, will act as joint lead managers and book runners. These institutions are poised to handle the investor meetings and calls, which are scheduled to commence this Monday.
Mashreqbank, one of the largest financial institutions in the UAE, has taken this step as it continues to diversify its financing options amidst a dynamic and competitive financial landscape. The sukuk issue follows closely on the heels of the bank’s US dollar Eurobond maturity in May, which totaled over $811 million , as reported by LSEG data. This ongoing capital market activity underscores Mashreqbank’s active approach to managing its debt portfolio while maintaining a robust liquidity position.
The bank’s decision to issue the sukuk within the framework of its established $2.5 billion trust certificate programme adds an extra layer of flexibility, allowing the financial institution to tap into both local and international markets, particularly those with a preference for Sharia-compliant investments.
Mashreqbank’s focus on issuing sukuk aligns with a broader regional trend in the Gulf Cooperation Council , where Islamic finance continues to grow in prominence. Sukuk issuances, particularly in the UAE, have become a cornerstone for financing projects, debt refinancing, and infrastructure developments. For Mashreqbank, this transaction represents not only a strategic financing move but also an opportunity to deepen its investor base, tapping into a pool of funds that has grown substantially in recent years.
While the sukuk market in the GCC has seen substantial growth, driven by both sovereign and corporate issuers, Mashreqbank’s approach stands out as it seeks to balance traditional banking with the growing demand for Islamic financial products. The sukuk market is seeing increased investor interest, particularly from institutional investors in Asia and Europe, as well as from regional buyers who see Islamic bonds as a stable and ethical investment option.
The five-year tenure of Mashreqbank’s sukuk issuance is noteworthy as it offers investors a reasonable yield within a timeframe that allows for flexibility. Typically, investors looking for Sharia-compliant fixed-income products consider the tenor and the underlying asset quality to assess the stability of their returns. Mashreqbank’s solid ratings from credit agencies provide confidence in the bank’s creditworthiness, a factor likely to support the sukuk’s appeal to a broad range of institutional investors.
Mashreqbank’s debt management strategy, particularly its handling of its upcoming Eurobond maturity, is likely to influence how investors view the sukuk issuance. By balancing the repayment of maturing debt with the issuance of new sukuk, Mashreqbank is demonstrating a proactive approach to maintaining its liquidity while managing refinancing risks.
For the banks involved in the transaction, this sukuk issuance is an opportunity to reinforce their roles as key players in the GCC’s growing capital markets. The consortium of lead managers, which includes both local and international names, is well-positioned to ensure that the sukuk issue receives wide distribution across various investor classes.
The involvement of institutions such as Standard Chartered Bank and the Islamic Corporation for the Development of the Private Sector adds an international dimension to the deal. These global players bring their extensive networks and experience to the table, further enhancing the visibility and marketability of the sukuk offering.
As Mashreqbank navigates this complex transaction, it will be interesting to see how the market responds to the sukuk. Given the current environment, marked by global economic uncertainty and fluctuating interest rates, investors will be keen to assess how Mashreqbank structures its offering to make it attractive. The outcome will be a key indicator of the continued strength and appeal of the sukuk market in the UAE, as well as a benchmark for other corporate issuers in the region.
Mashreqbank’s move also highlights the growing importance of sukuk in the financial strategies of banks in the UAE and beyond. Islamic finance, with its principles of risk-sharing and ethical investing, is gaining traction not only in the Middle East but also in Western markets that are increasingly open to Sharia-compliant instruments.
