Dubai - Abu Dhabi, home to about 6 percent of the world’s oil reserves, is said to be considering raising about $10 billion from a dollar bond sale as early as Tuesday to help plug a budget deficit.
Encouraged by Saudi Arabia’s $12.5 billion sale last week, the biggest sovereign deal in emerging markets this year, Abu Dhabi opened books on Monday for a three-part offering ranging from five to 30 years, people familiar with the matter said, declining not to be identified because the talks are private. No final decision has been made on the size of the transaction, which will be subject to order books, they said.
Initial price thoughts, which were announced after calls with investors, are as follows:
Gulf Cooperation Council states, which includes the biggest Arab economy of Saudi Arabia, are selling debt as regional governments seek to bridge budget deficits brought on by low oil prices. Abu Dhabi, whose debt carries the third-highest investment grade at S&P Global Ratings, raised $5 billion in April 2016, its first bond sale in seven years.
The debt offering this week spurred a nine-basis-point increase in the yield on Abu Dhabi’s existing dollar bonds due 2021, the most since November, to 2.27 percent as of 4:09 p.m. in Dubai.
The capital of the United Arab Emirates mandated Bank of America Merrill Lynch, Citigroup Inc., First Abu Dhabi Bank PJSC, HSBC Holdings Plc, and JPMorgan Chase & Co. as joint lead managers and bookrunners to organize the calls.
An external representative for Abu Dhabi’s finance department didn’t immediately respond to a request for comment.
