National Bank of Abu Dhabi (“NBAD”), rated Aa3 by Moody’s, A by S&P and A+ by Fitch has successfully launched its inaugural Sterling Fixed Rate transaction under its USD 5,000,000,000 EMTN Programme. NBAD has one of the highest combined credit ratings in the Middle East.
Building on NBAD’s continuously improving credit story, lead managers, Barclays Capital and The Royal Bank of Scotland, launched NBAD’s inaugural transaction in the Sterling currency sector by issuing a £ 350 million Fixed Rate Notes.
The annual coupon is 5.875% and the issue priced at a yield to investors of +66 basis points over the UKT 5% 07 March 2012. The transaction settles on 27th February 2007 and the maturity date of the notes is 27th February 2012.
NBAD announced a benchmark sized sterling issue to the market and conducted a Roadshow throughout London, Edinburgh and Glasgow, the three main centres of demand. NBAD’s senior management presented the bank’s credit story and achieved the key goal of differentiating the credit from the outstanding market comparables and highlighting the “convergence play” available to investors in the region as a whole.
The strength of the marketing process meant that the issuer was able to build an oversubscribed order book in spite pricing inside guidance at a record tight for the sector. The orderbook was made up of 23 high quality accounts and gave NBAD close to 100% diversification of its funding base. The final allocations were 73% to UK accounts, 12.5% to Scandinavian, 4.5% to Switzerland, 4.5% to Germany, Offshore US 3.5% and only 2% of the paper was placed with accounts in the Middle East. The allocation of the transaction was well diversified with 53% to asset managers, insurance 19%, banks 14%, Central Banks 12.5%, Pensions 1.5%.
NBAD initially announced a 5 to 7 years benchmark sized sterling issue. NBAD’s choice of a 5 years maturity was in response to general investor preferences and provides the market with a new liquid benchmark. This transaction allows NBAD to further lengthen the average maturity of its funding as well as further diversifying its investor base.
After the Roadshow was completed an initial price guidance of Gilt +67bps to +68bps was communicated to the market. The transaction gained momentum and the order book grew with strong demand from quality investors; NBAD’s lead managers priced a £350 million transaction inside the initial guidance at Gilt + 66bps.
NBAD was successful, for the second time after their dollar deal in Dec. 2005, in achieving the tightest and lowest ever priced deal to be issued by a Middle Eastern Financial Institution.
