UAE issues a historic 'federal' bond issue to raise $4b
Debt issue comes in three tranches of 10-, 20- and 40-year tenors
Dubai: The UAE's Ministry of Finance has released a $4 billion bond package for subscription, featuring a 10-year tranche, another of 20 years, as well as a 40-year dual-listed Formosa tranche. This is a historic debt offering given that it is the first issued by the federal government and not by an individual emirate.
"Throughout its development, the UAE has adopted a solid and comprehensive approach to economic and social development, which included building a strong credit profile, a solid balance-sheet for the Union, and a low level of government debt," said Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and Deputy Prime Minister and Minister of Finance, in a statement.
“In addition to its efforts to enhance the efficiency and skills of human talent, the country has successfully managed to achieve high financial solvency and reserves as a direct result of its efficient management of economic projects."
The UAE Government is rated AA- by Fitch and Aa2 rating for credit worthiness by Moody's, which is the highest sovereign rating in the region by the international rating agency.
Change to the law
The Federal Decree No. (9) of 2018 on public debt enabled the UAE government to issue sovereign bonds and help the banking sector to meet global liquidity standards as soon as they are issued - "thus supporting the role of the Central Bank of the UAE in managing liquidity in the banking sector".
The Ministry of Finance has authorised Abu Dhabi Commercial Bank, BofA Securities, Citigroup Global Markets, Emirates NBD Capital, First Abu Dhabi Bank, HSBC Bank, J.P. Morgan Securities, Mashreqbank, and Standard Chartered Bank to be lead managers and bookrunners.