The United Arab Emirates priced its first ever dollar bonds as a combined federation, luring bids for more than five times the amount on offer.
The federation, comprised of seven emirates including Abu Dhabi and Dubai, priced $4 billion in dollar-denominated debt due in 10, 20 and 40 years, according to a person familiar with the matter who isn’t authorized to speak publicly and asked not to be identified. Order books topped $22 billion.
Government officials and bankers have spent the past two days drumming up support for the UAE’s offering, holding global calls with investors from New York and London to Singapore and Tokyo. Proceeds from the debt will go toward infrastructure projects and investments by the nation’s sovereign wealth fund.
The UAE offering is “a precursor to potentially a local-currency issuance,” Doug Bitcon, the Dubai-based head of credit strategies at Rasmala Investment Bank, said on Bloomberg TV. “This will be the next step to the development of the financial markets within the UAE.”
The sale comes as investors brace for the Federal Reserve to start winding down stimulus. Emerging-market bond sales sprung back to life in September, a month that saw $71 billion of issuance from governments and companies after $90 billion of sales over the previous 10 weeks. Debt sold by Egypt, Nigeria, Indonesia, Turkey, Chile, Serbia and Hungary all met with robust investor demand.
The UAE’s debt is rated by Moody’s Investors Service at Aa2, the third-highest investment grade, and one step lower at AA- by Fitch Ratings. The federation is comprised of Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Fujairah and Ras Al Khaimah.
The federation, comprised of seven emirates including Abu Dhabi and Dubai, priced $4 billion in dollar-denominated debt due in 10, 20 and 40 years, according to a person familiar with the matter who isn’t authorized to speak publicly and asked not to be identified. Order books topped $22 billion.
Government officials and bankers have spent the past two days drumming up support for the UAE’s offering, holding global calls with investors from New York and London to Singapore and Tokyo. Proceeds from the debt will go toward infrastructure projects and investments by the nation’s sovereign wealth fund.
| PRICING RESULTS | |
|---|---|
| $1 billion in debt due 2031 | T+70 basis points |
| $1 billion in debt due 2041 | T+105 basis points |
| $2 billion in debt due 2061 | 3.25% |
The sale comes as investors brace for the Federal Reserve to start winding down stimulus. Emerging-market bond sales sprung back to life in September, a month that saw $71 billion of issuance from governments and companies after $90 billion of sales over the previous 10 weeks. Debt sold by Egypt, Nigeria, Indonesia, Turkey, Chile, Serbia and Hungary all met with robust investor demand.
The UAE’s debt is rated by Moody’s Investors Service at Aa2, the third-highest investment grade, and one step lower at AA- by Fitch Ratings. The federation is comprised of Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Fujairah and Ras Al Khaimah.
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