First Gulf Bank , the second-biggest bank in the United Arab Emirates by market value, plans to raise $650 million from the sale of a five-year debut Islamic bond, or sukuk, according to a document from lead arrangers, seen by Reuters.

Pricing is expected later on Tuesday and final guidance is at 200 basis points over midswaps, tighter than the earlier indicated guidance of 210 basis points over midswaps, the document showed.

A source close to the bank said the sukuk would price at 1230 GMT on Tuesday.

Two market sources said First Gulf Bank (FGB) cancelled the final leg of roadshows in Switzerland on Tuesday, and that demand for the sukuk was very high, although there was no clear indication of book size yet.

Citi , Standard Chartered and HSBC are mandated bookrunners for the sale.

FGB, 67 per cent owned by Abu Dhabi's ruling family, set up a new $3.5 billion Islamic bond programme this month, paving the way for its first sukuk sale.

Recent market volatility, mainly due to euro zone debt worries, led some other Gulf issuers, including Abu Dhabi's Dolphin Energy and Tourism Development and Investment Co (TDIC), to refrain from issuing bonds until conditions are considered more stable.

But FGB is taking advantage of improved market sentiment, after a new Greek debt deal was agreed last week, and a limited window of opportunity to issue ahead of the holy month of Ramadan.

The bank posted a 13 per cent rise in second quarter profit.