* FGB picks HSBC, Citi, NBAD, Stanchart and Deutsche for
* Abu Dhabi lender has two upcoming maturities in November
* FGB shares up nearly 30 pct YTD; sukuk yields down
(Adds detail, background)
By Rachna Uppal and Stanley Carvalho
ABU DHABI, Sept 25 First Gulf Bank
(FGB), the second-largest lender by market value in the United
Arab Emirates, has hired five banks for a new benchmark-sized
bond sale, three sources familiar with the matter said on
FGB picked Citigroup Inc, HSBC Holdings,
National Bank of Abu Dhabi, Deutsche Bank
and Standard Chartered Plc for the deal, which is
expected to be at least $500 million in size.
Strong demand for high-rated regional names and narrowing
spreads in recent weeks is prompting firms like FGB to tap bond
markets as they look to bring their borrowing costs down.
Two sources said the deal could be announced as early as
Tuesday or Wednesday this week. The sources declined to be
identified as the bond issue plan is not yet public.
All of the above banks are helping arrange an $800 million
loan for FGB, which is majority-owned by Abu Dhabi's ruling
family, to fund its growth and expansion.
FGB's last two forays into the global debt markets have been
through the sale of Islamic bonds, or sukuk, due to the pricing
advantage offered by the more stable asset class during market
volatility in the last two years.
The bank last tapped global debt markets in January when it
raised $500 million through a five-year Islamic bond, or sukuk,
as part of a $3.5 billion Islamic bond programme it established
The sukuk was yielding 2.6 percent on Tuesday
afternoon, down from nearly 3 percent about a month ago,
according to Thomson Reuters data.
Yields on its $650 million sukuk issued last August
have dropped about 23 basis points in the last 10
The lender has a separate $3.5 billion euro medium term
notes programme under which it issued a $500 million bond in
2009. That three-year bond is due to mature in
November, and was bid close to par on Tuesday.
It also has an $825 million term loan maturing in late
Shares in FGB were trading 0.2 percent higher at 0830 GMT.
The stock is one of the best performers on the Abu Dhabi bourse
this year, with year-to-date gains of nearly 30 percent.
The company reported a forecast-beating increase in
second-quarter profit on the back of increased lending and a
better net interest margin.
(Additional reporting Shaheen Pasha at The Brief; Editing by
Amran Abocar and Dinesh Nair)