NBAD raises convertible bond issue to $465m
Abu Dhabi, May 24, 2013
National Bank of Abu Dhabi (NBAD), the UAE's largest lender by market value, has increased its convertible bond offering to $465 million following high demand from investors for a rare convertible from the Gulf region.
The bank announced earlier on Thursday it would market a $350 million five-year deal but, in a later statement, said it had hiked the final amount after strong investor demand during the marketing process.
High demand, mostly from Europe-based investors, could be attributed to the fact it was the first convertible bond from a Gulf entity since 2010, while NBAD's AA- rating meant there weren't many similarly-rated deals available to investors globally, according to one banker familiar with the matter.
The significant interest allowed the bonds to price at the tight end of the 1 - 1.5 per cent coupon range, the statement added. This made it one of the cheapest convertible deals ever to emerge from the Middle East, the banker said.
The conversion price was set at $4.24, a 30 percent premium to the volume weighted average price (VWAP) of NBAD shares between launch and pricing. NBAD shares closed on Thursday at 12.05 dirhams ($3.28).
"The offering of the bonds will help NBAD diversify its funding sources and investor base and proceeds will be used for general corporate purposes," the statement said.
An option to extend the deal by a further $35 million was available to NBAD, although a decision on whether to do that could be taken up to June 3, the statement added.
The transaction, which would represent 2.75 per cent of NBAD's share capital if an over-allotment option is exercised, was arranged by Barclays, BofA Merrill Lynch, JP Morgan Chase and NBAD itself.-Reuters