LONDON: Dubai Financial Group has signed a $1.5 billion, three-year syndicated Islamic loan, the arranging banks announced yesterday.
The murabaha facility, which closed oversubscribed, pays a profit rate of 200 basis points (bps). Proceeds will be used to explore new growth opportunities, support current investments, and refinance existing debt.
The deal, which is available in UAE dirhams or Qatari riyals, as well as US dollars, is the largest-ever multicurrency syndicated commodity murabaha transaction in the UAE, the banks added.
As previously reported, banks were invited to commit $75 million equivalent as mandated lead arrangers for an upfront fee of 75 bps, $50 million equivalent as lead arrangers for 60 bps, or $20 million equivalent as arrangers for 40 bps.
Arranging banks are Al-Hilal Bank, Al-Khaliji Commercial, First Gulf Bank, Noor Islamic Bank, Standard Bank and Royal Bank of Scotland. Noor Islamic Bank also acted as the sole shariah advisor and investment agent for the facility. In a murabaha deal a financier buys a commodity and sells it to the customer at a higher price, complying with Islam’s ban on interest.
Dubai Financial, a unit of Dubai Holding, invests in financial services firms with a focus on South East Europe, the Middle East and North Africa and Asia, according to its website. It holds stakes in companies including Greece’s Marfin Popular Bank, Oman’s largest lender Bank Muscat and Egyptian investment bank EFG-Hermes.
Merrill’s rating
Merrill Lynch kept Dubai Islamic Bank on its least preferred Eastern Europe, Middle East, and Africa (EEMEA) financial stocks list, while it maintained Union National Bank on its most preferred list.
“Dubai Islamic Bank’s reputation has been tarnished from negative news flow regarding three embezzlement cases, two regarding its real estate associate Deyaar and mortgage company Tamweel and the other involving the bank itself,” Merrill Lynch wrote in a research note.
