Dubai Islamic Bank (DIB), the world’s first Islamic bank and the largest in the UAE, has successfully launched its inaugural Sustainability-Linked Financing Sukuk. With a value of $1 billion and a five-year maturity, this Sukuk issuance represents a significant milestone in the evolution of Islamic finance. The Sukuk, priced at a competitive profit rate of 4.572% per annum, introduces an innovative performance-linked structure. Unlike traditional Sukuk, which is based on specific use-of-proceeds, this one ties its success to measurable, independently verified sustainability targets, contributing directly to the UAE’s Net Zero 2050 Initiative.
Investor interest in this new structure was overwhelming, with the Sukuk being oversubscribed by more than two times. The orderbook reached a peak of $2 billion, reflecting robust global demand. The issuance saw participation from over 80 institutional investors across Europe, Asia, and the Middle East, further underscoring the growing appeal of sustainable finance. The allocation highlights revealed that 67% of the Sukuk was allocated to investors from the MENA region, while Asia accounted for 20%, marking the highest-ever Asian participation in a public Sukuk issuance by DIB.
The investor base was primarily composed of banks and private banks, which received 77% of the allocation, followed by 17% for fund managers, and 6% for insurance companies, pension funds, and sovereign wealth funds. The strong demand allowed the final pricing to tighten to 90 basis points over US Treasuries, down from the initial 120 basis points, further showcasing the market’s confidence in this groundbreaking Sukuk.
The funds raised through this Sukuk will be used to finance a diversified portfolio of general corporate-purpose sustainability-linked projects. These projects will focus on clients committed to achieving sustainability Key Performance Indicators (KPIs) that are pre-agreed and measurable. The performance-driven nature of the Sukuk ensures that the financing is directly tied to tangible and impactful sustainability goals, making it a pioneering step in advancing Islamic sustainable finance.
Dr. Adnan Chilwan, Group CEO of DIB, emphasized the bank’s commitment to leading by example: “As the world’s first Islamic bank, our responsibility has always extended beyond offering compliant structures. It is to lead with purpose and to demonstrate how Islamic finance can deliver measurable and responsible impact. This Sustainability-Linked Sukuk reflects that progression. It moves us from intention to performance.”
This Sukuk issuance is part of DIB’s broader $12.5 billion Sukuk Programme and is supported by a Sustainability-Linked Financing Framework that was independently assessed by Institutional Shareholder Services (ISS). The assessment provided a Second-Party Opinion confirming the alignment of the Sukuk with international best practices, further ensuring its credibility and long-term sustainability.
