Dubai

Abu Dhabi’s $10 billion dollar bond issue received robust interest from US, UK and European investors, and they contributed to 78 per cent of the order book, indicating the capital’s solid credit fundamentals.

Abu Dhabi, which enjoys the strongest credit rating in the region, came to the bond market after a gap of 16 months to exploit the pent-up demand from yield hungry investors ahead of an expected rate hike from the US Federal Reserve in December.

The $10 billion dollar bond issue was oversubscribed 3 times with 500 orders, and the bonds were priced at a spread of 65, 85 and 130 basis points, for 5-, 10-, and 30-year tranches over and above US Treasuries respectively, the department of finance Abu Dhabi said in a statement.

“The strong reception of the offering in the international debt capital markets is a clear testament to Abu Dhabi’s solid and strong credit story. We are pleased to witness investors’ high confidence in the Emirate’s fundamentals — namely, our wise leadership, focused growth strategy and high buffers. These strengths have collectively created a diverse, robust and sustainable economy,” Riyad Abdulrahman Al Mubarak, the Chairman of the Department of Finance Abu Dhabi, said.

“As we look ahead, we will continue to prudently manage our indebtedness levels, which are currently one of the lowest globally,” Al Mubarak said.

Emirates NBD expects the second half to match the bond issues done in the first half of this year, which was at a record $43 billion, and expects 2017 to be arecord year in terms of issuances.

“Looking at pipeline, we expect $3-$10 billion more bond issues between now and December,” Anita Yadav, Head of Fixed Income Research, Senior Director — Wholesale Banking at Emirates NBD told Gulf News on October 3. On a year to date basis, the GCC has issued dollar bonds worth $75 billion compared to $72 billion in 2016.

Analysts say the investor appetite for GCC dollar bonds will remain strong.

“The demand for dollar bonds remains high in the region, driven by relatively still low interest rates, the hunt for higher yields and demand for duration by the insurance or pension companies. Improving liquidity in the banking sector also supported bid tone,” Yadav said.