It’s fair to say that 2020 has been a difficult year for many issuers to navigate, but at First Abu Dhabi Bank (FAB), head of group funding Rula AlQadi could afford to be sanguine when the markets closed down in the early stages of the Covid pandemic.
By the end of February, FAB had already issued four deals in the public markets, raising $1.8bn equivalent. That started with a $500m five year sukuk in January, followed by a visit to the Formosa market to raise $485m from the sale of 30 year callable bonds the same month. Then — on consecutive days in February — came its debut benchmark deals in both the Kangaroo and sterling markets, raising A$350m ($235m) and £450m ($582m), respectively.
“During the crisis, credit spreads widened globally to elevated levels and we started to see large, global banks executing deals at those levels whilst paying up to 90bp in new issue premiums,” says AlQadi. “We were comfortable waiting because we had executed those deals at the beginning of the year.”
What’s more, when markets reopened, the long-end investor base in Taiwan was back first, allowing FAB to return to the Formosa market and raise additional funding in size and at competitive pricing.
“We haven’t needed to tap the dollar benchmark market at all, and have still raised $4.5bn — and we’ve done that well inside our curve,” says AlQadi. “We did not feel the pressure of the elevated levels that other banks did because we have previously focused on investor and market diversification which meant we could tap those pools of liquidity while others were waiting for the conventional Reg S dollar market to return.”
The Formosa market has been a key plank of FAB’s diversification strategy. In 2019, it raised $2.45bn from three visits to the Taiwanese market as it built up a dollar floating rate curve with 2022, 2023 and 2024 maturities.
“The Formosa market ticks several boxes for us,” she says. “It helps us develop a new investor base both in dollars and CNH, the pricing is competitive with our conventional curve, and we’ve been able to build an outstanding public FRN curve.”
In 2020 it changed tack to target the long-end investor base of Taiwanese insurance accounts, starting the year with a $485m 30-year non-call five zero-coupon bond, before returning with a $500m deal in May and another $640m in June.
Also in that month, FAB issued its first fixed rate Formosa product of 2020, this time issuing in offshore renminbi, raising Rmb1.4bn ($197m) and printing another Rmb3.6bn ($514m) in July. In total, that took its Formosa issuance alone in 2020 to $2.3bn equivalent — all at what AlQadi says were exceptional pricing levels — and making FAB the second largest financial issuer in the market, behind only Citigroup.
FAB is always open for MTN private placement enquiries and is a regular opportunistic issuer — which has helped drive term funding to 8% of its total liabilities without being heavily reliant on traditional dollar Reg S-only fixed rate public markets. Private placements offer pricing advantages, and AlQadi sees the market as a great way to reach new investors, whether in the local market, in Europe or in Asia.
Indeed, its telling that among all the large, landmark transactions that FAB has been involved in this year, the one she says she is most proud of is an MTN issue. It sold a HK$750m ($97m) MTN under its green bond framework in June, the first ever HK dollar private placement green bond executed by an offshore financial institution and also the first from the MENA region.
AlQadi, joined First Gulf Bank (FGB) — which merged with National Bank of Abu Dhabi (NBAD) to become FAB in 2016 — as an investment analyst in 2005.
She then worked in investment banking, treasury and global markets before being given the role of head of group funding at FAB three and a half years ago to become the first female head of funding in the UAE.
Since then, AlQadi has won praise for FAB’s funding strategy from coverage bankers in the region as she and her team have diversified into new markets and broken issuance records with several landmark deals.
AlQadi’s strategy is to first focus on taking care of the bank’s investors which allows FAB to be fast and responsive when taking advantage of any market opportunities. “We’re always in touch with the bank’s investors, providing regular feedback and not just when we want to market a deal,” she says. “This approach leads to us having a lot of inquiries coming in from investors asking us to issue in a variety of formats and that pays off when we do a deal.”
