DIB sells first sukuk in emirate since virus outbreak

A DIB branch in Dubai, where lockdown measures are being lifted. (Reuters)
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Updated 11 June 2020

DIB sells first sukuk in emirate since virus outbreak

  • The DIB sukuk was over- subscribed by 4.5 times

RIYADH: Dubai Islamic Bank (DIB), the UAE’s largest Islamic lender, sold a $1 billion sukuk, the first in the emirate since the coronavirus disease (COVID-19) pandemic broke out across the world, forcing much of region into lockdown.

The five-year Islamic bond has a profit rate of 2.95 percent and attracted strong investor interest, the bank said in a stock exchange filing.

The deal was priced after completing a global investor call, which was attended by several local, regional and international investors. The sukuk was oversubscribed by nearly 4.5 times, and attracted more than 170 investors.

DIB said almost half of the order book originated from outside the Middle East and North Africa region.

“Despite the challenging global environment due to the COVID-19 pandemic, we are grateful for the positive response from the global investor community,” said CEO Adnan Chilwan.

The debt sale comes as several corporations and governments in the Gulf seek to bolster their finances to face the economic fallout from the COVID-19 pandemic and a historic slide in oil prices.

The sale comes just weeks after the emirate of Sharjah, the third-largest in the UAE, sold $1 billion in seven-year sukuk, or Islamic bonds.

The pandemic has increased funding pressures on governments and companies alike across the region.

Earlier this year S&P Global Ratings warned that the knock on effects of lower economic growth and oil prices could slow lending growth and increase the overall stock of problem assets across the Gulf economies.

Oil prices ‘likely to remain static despite output cuts’

Updated 01 October 2020

Oil prices ‘likely to remain static despite output cuts’

  • Survey points to uneven recovery with demand under threat from rising coronavirus cases

BENGALURU: Oil prices will stay near current levels this year as rising novel coronavirus cases threaten to slow the pace of demand recovery and counter output curbs by top producers, a Reuters poll showed on Wednesday.

The survey of 40 analysts and economists forecast benchmark Brent crude averaging $42.48 a barrel in 2020. That compares with an average of $42.54 this year and last month’s forecast of $42.75. Brent is projected to average $50.41 in 2021.

The 2020 US crude price outlook was at $38.70 per barrel versus $38.82 predicted in August. It has averaged $38.20 this year.

“As long as there is no working vaccine available, the main risk for oil prices is lower-than-expected demand,” Hans van Cleef, senior energy economist at ABN Amro said.

Global demand was seen contracting by 8 million-9.8 million bpd (barrels per day) this year, slightly less bleak than the 8 million-10 million bpd consensus last month.

“Demand recovery should still continue in our view, although at a slower pace with the easiest demand gains behind us,” said UBS analyst Giovanni Staunovo.

The recovery “will remain uneven”, he added.

Brent prices are on track for their first monthly decline in six as rising coronavirus infections across many regions, including Europe and the US brought new restrictions, while global cases surpassed 33 million.

The International Energy Agency this month cut its 2020 demand forecast by 200,000 bpd to 91.7 million bpd.

But production cuts led by the Organization of Petroleum Exporting Countries (OPEC) and its allies will offer some support to prices, analysts said, with the group curbing output by 7.7 million bpd.

“We suspect compliance with the OPEC+ deal will remain patchy but doubt that this will prevent the group from extending or even deepening its output cuts later this year,” Capital Economics analyst Caroline Bain said.