Emirates NBD to Launch $1 Billion AT1 Capital Securities at 6.25%
The issuance is managed by a consortium of leading financial institutions, including ADCB, Bank of America Securities, Citigroup, Emirates NBD Capital, First Abu Dhabi Bank, and Standard Chartered Bank, serving as joint lead managers and bookrunners. Emirates NBD holds credit ratings of A2 from Moody's and A+ from Fitch.
This move marks Emirates NBD's return to the AT1 market, following its previous issuances. The bank currently has three outstanding AT1 instruments, one of which is a $1 billion perpetual bond with a 6.125% coupon, callable in March 2025. The new issuance aims to strengthen the bank's capital base and support its growth objectives.
AT1 capital securities are hybrid instruments that combine features of debt and equity, designed to absorb losses in times of financial stress. They are perpetual in nature but can be called by the issuer after a specified period. For investors, these instruments offer higher yields compared to traditional bonds, reflecting the associated risks.
The decision to set the first call date in August 2030, with a subsequent rate reset in February 2031, provides Emirates NBD with flexibility in managing its capital structure. This structure allows the bank to potentially refinance the securities under more favorable conditions, depending on market dynamics at that time.
The consortium of joint lead managers and bookrunners brings a wealth of experience to the issuance. ADCB, Bank of America Securities, Citigroup, Emirates NBD Capital, First Abu Dhabi Bank, and Standard Chartered Bank are all prominent players in the global financial markets, ensuring robust demand and efficient execution for the offering.
Emirates NBD's strong credit ratings from Moody's and Fitch reflect its solid financial position and prudent risk management practices. The positive outlook from Moody's indicates potential for an upgrade, while Fitch's stable outlook suggests consistent performance in line with current ratings.
The bank's strategic focus includes expanding its regional footprint and enhancing digital banking services. Proceeds from the AT1 issuance are expected to support these initiatives, enabling Emirates NBD to capitalize on emerging opportunities in the banking sector.
Investors considering participation in this offering should assess the associated risks, including the perpetual nature of the securities and the potential for loss absorption. The 6.25% yield reflects both the credit quality of Emirates NBD and the inherent risks of AT1 instruments.
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