Source: Reuters/Tim Wimborne
A National Australia Bank sign is reflected in the window of a shop front in Sydney
NAB, rated (Aa2/AA–/AA–), is believed to be looking to raise as much as US$500m from an inaugural Sharia-compliant offering that would serve to further diversify its investor base, according to bankers away from the deal. Malaysian, Indonesian and Middle Eastern funds are likely to be among the targets for such a deal.
A number of Australia’s states have already introduced tax changes to level the playing field for Islamic financing At the federal level, however, progress has been slower. Australia’s Board of Taxation invited comments to a discussion paper on Islamic finance in October 2010 and has since submitted its report to the treasury, according to its website.
The currency of the offering was not immediately clear. However, one local fund manager predicted that an Australia dollar deal would appeal both to the issuer and to overseas investors.
“Assuming the economics work, it would make a lot of sense for NAB and the other majors to tap the revived appetite for Islamic bonds, while on the buyside an Aussie dollar issue represents welcome diversification from a market dominated by US dollar and local currency paper,” said the fund manager.
