Abu Dhabi SWF Mubadala Investment Company Issues Second Sukuk in 2024 Through an AED1bn Sukuk Wakala Offering in the UAE Domestic Market in November
There is no stopping the momentum of sovereign wealth funds’ (SWFs) engagement with the Islamic finance market especially in the origination of Sukuk issuances. Hardly had Abu Dhabi’s Mubadala Investment Company, the 10th largest SWF in the OIC, issued its maiden Senior Unsecured RegS Sukuk Wakala – a 10-year US$1bn offering in the international market in April 2024, it returned in October 2024 with an AED1bn (USD252. 27mn) Sukuk Wakala offering in the domestic UAE market.
Given that there are 31 SWFs in the OIC countries, if more of them enter the Sukuk market to raise funds for their investment strategies and general corporate purposes, then it would give that vital market depth and critical mass of issuers which would eventually lead to a yield curve for such issuances many of which are AAA or investment grade rated papers.
Mubadala – through its subsidiary, Mamoura Diversified Global Holding (MDGH), incorporated in the Abu Dhabi Global Market on 20 February 2024 – had mandated Emirates NBD Capital, JP Morgan Securities, HSBC Bank, Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, First Abu Dhabi Bank, ICBC International Securities Ltd, and Standard Chartered Bank to arrange a series of investor meetings and calls starting on November 2024 with accounts in London, Europe, the Gulf Cooperation Council (GCC) region, the MENAT region, and Asia for the issuance of 5-year senior unsecured RegS benchmark-sized papers denominated in AED and with a size of up to AED1bn.
The Sukuk certificates were issued through MDGH Sukuk Limited, a subsidiary of MDGH, the Obligor, under its newly established unlimited Trust Certificate Issuance Programme, established on 25 March 2024. MDGH is the specialised investment arm of the Abu Dhabi government in the United Arab Emirates. The company has oil and gas assets in North Africa, Asia, the Middle East and the Capsian. Mubadala Investment Company PJSC (Mubadala), founded in 2002 according to the latest data from the SWF Institute, has current assets under management of USD302.42bn.
MDGH, according to Fitch Ratings, is a sovereign wealth fund for the Abu Dhabi government, with the policy goal of generating sustainable financial returns to realise the government’s vision of a globally integrated and diversified economy through a diversified portfolio of investments. The 5-year certificates structured under the Wakala contract and rated ‘AA’ by Fitch Ratings with a Stable outlook, have a maturity of 5 November 2029.
The transaction was well received by the market with strong demand for the certificates and the order book reaching AED2.3bn, which means it was 2.3 times over-subscribed. The indicative price for the sale of the Sukuk certificates were set at 4.850% per annum, but due to the strong demand, the price tightened and was finally set at a fixed coupon rate of 4.60% per annum – payable semi-annually in arrears. This compared to the coupon rate of 4.959% per annum for the USD1bn April 2024 Sukuk offering.
The Sukuk certificates were admitted to trading on the Main Board of the London Stock Exchange and for listing on the Official List of the FCA from 5 November 2024 and on the Abu Dhabi Securities Exchange.