Abu Dhabi raises $5 billion with first treasury bonds since 2021

Issuance is spread across three maturity periods five, 10 and 30 years

Abu Dhabi sold its first bond since 2021, raising $5 billion in one of the biggest deals from emerging markets this year, the emirate’s Department of Finance said.

The issuance of across three maturity periods five, 10 and 30 years attracted strong investor demand and underpinned the emirate’s commitment to delivering on its comprehensive economic development strategy.

The final yields were significantly tighter than the guidance from when the sale started on Tuesday morning, suggesting there was plenty of demand from global investors.

The issuance included a $1.75 billion tranche maturing in 5 years with a coupon rate of 4.875 per cent, a $ 1.5 billion tranche maturing in 10 years with a coupon rate of 5.0 per cent, and a $1.75 billion tranche maturing in 30 years with a coupon rate of 5.5 per cent. The rates represent a 35-basis point spread over 5-year US Treasuries, a 45-basis point spread over 10-year Treasuries, and a 90-basis point spread over 30-year Treasuries.

The issuance was 4.8 times oversubscribed and the pricing landed meaningfully inside fair value. The spread achieved by Abu Dhabi represents the tightest spread ever achieved by the emirate and the tightest spread ever achieved by any issuer in the CEEMEA region for 5, 10, and 30-year issuances, a testament to the deep trust international investors place in Abu Dhabi’s financial stability, even during periods of increased volatility.

Rating agencies Standard & Poor’s and Fitch have both assigned a credit rating of ‘AA’ to the bonds.

Jassem Mohammed Bu Ataba Al Zaabi, chairman of the Department of Finance Abu Dhabi, said the successful issuance was backed by strong demand from global investors, and is in line with Abu Dhabi’s long-term approach and philosophy for conservative and optimal debt management, under our AA credit ratings. “The investor appetite and the lowest spreads ever achieved by an issuer in the CEEMEA region, stand testament to global investor confidence in Abu Dhabi’s financial stability as well as its positive long-term economic outlook.”

The bond issuance was managed by lead managers and underwriters including Abu Dhabi Commercial Bank, Citi, First Abu Dhabi Bank, HSBC, JP Morgan, Morgan Stanley, and Standard Chartered Bank.

Abu Dhabi’s last debt market activity included a $2 billion bond in May 2021, followed by a further $3 billion in September. The emirate has a credit rating of “Aa2” from Moody’s and “AA” from S&P and Fitch Ratings.

Source: khaleejtimes

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