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Mubadala tightens sukuk spread as orders hit $7bn

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Abu Dhabi wealth fund Mubadala has $276bn in assets under management

A subsidiary of Abu Dhabi’s Mubadala Investment Company is raising $1 billion through a US dollar-denominated 10-year sukuk (sharia-compliant bond), a news report said.

The new funds will be raised by Mamoura Diversified Global Holding, Reuters reported, citing a document. The purpose of the fund was not given.

Book orders topped $7 billion, which allowed the sovereign wealth fund to tighten the spread to 70 basis points (bps) over US Treasuries from its initial guidance of 100 bps, the report added.

Sukuk are Sharia compliant bonds that were developed as an alternative to conventional bonds which are not considered permissible by many Muslims as they pay interest, and also may finance businesses involved in activities not allowed under Sharia law.

The Abu Dhabi fund has $276 billion in assets under management, with 23 percent of that located domestically, 38 percent in the US, 2 percent in China and 37 percent in the rest of the world, AGBI reported in March, based on data from the consultancy Global SWF.

In October 2023, Mubadala issued its first-ever $750 million green bond with a 10.5-year tenor. The order book peaked at more than $6 billion and was oversubscribed 9.1 times.

The UAE has witnessed a strong push for sukuk to finance green projects, Fitch Ratings said last November.

The pipeline for green sukuk – or environmental, social and governance (ESG) sukuk – in the UAE grew by 41 percent compared with the previous quarter to reach $6.4 billion at the end of September.

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