Dubai Islamic Bank (DIB) sold its debut issue of $750m of Islamic bonds at the lower end of a previously announced price range, data supplied by International Insider showed yesterday.

The bank, the third largest Gulf Arab Islamic lender by market value, priced the five-year bonds at 33 basis points over three-month dollar Libor, after previously giving a price guidance of 33 to 36 points.

No-one at the bank was immediately available for comment.

Barclays, Standard Chartered and Citigroup managed the issue, rated A1 by Moody's and A by Standard and Poor's. Dubai Islamic marketed the Islamic bond, or sukuk, issue to investors in the Middle East, Asia and Europe. Sukuk are typically backed by physical assets that pay a dividend or rent to bondholders rather than interest, which Islam equates with usury.

Surging demand among the world's 1.2 billion Muslims for investments that comply with their religious beliefs led Dubai property developer Nakheel to increase a bond last year by 40 per cent to $3.52bn, making it the largest ever sold.

Dubai Islamic said in November it was in talks to arrange the sale of about $10bn of Islamic bonds for companies, including some from the West looking to tap Gulf Arab oil wealth.

The lender also said that month it planned to open branches in Saudi Arabia and Qatar as part of an expansion plan to more than double its branch network to 100 by mid-2008.