Abu Dhabi and Qatar’s investment- grade bonds are extending their rally after providing the world’s best returns among similarly-rated notes in the past three years, buoyed by higher oil prices.
The yield on Abu Dhabi’s notes due 2019 fell to a record low yesterday, having returned an annual 13 per cent since they were issued in early April 2009, data compiled by Bloomberg show. Qatar’s similar-dated debt earned 12 per cent a year over that period, and the yield dropped to the lowest since September yesterday. The increase since April 2009 is the most for nations ranked Aa2, the third-highest investment grade, or above by Moody’s Investors Service. Comparable US and German debt handed equivalent annual yields of 7 per cent or less.
The emirates’ bonds, rated Aa2, are rising as crude’s jump to $103 a barrel from $52.50 in April 2009 spurs faster economic growth in the Arabian Gulf. Contracts measuring credit risk for Abu Dhabi, owner of 90 per cent of the United Arab Emirates’ oil reserves, and Qatar, the world’s top liquefied-natural-gas exporter, fell more than 50 per cent in the past three years.
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