Abu Dhabi is selling its first eurobonds in about three years, as expectations fade that US interest rates will fall soon.
The oil-rich sheikhdom, which is part of the United Arab Emirates, is offering a dollar deal with tranches of five, 10 and 30 years, according to a person familiar with the matter. The final terms, including the size and yields, may be announced later on Tuesday.
Abu Dhabi, rated at the third-highest investment grade by the three major agencies, is tapping markets as the odds of imminent rate cuts recede. Emerging-market bond sales had a record start to the year as expectations built for monetary easing by the Federal Reserve.
With a $3 billion bond falling due in September, the emirate is following the likes of Saudi Arabia in borrowing abroad this year.
Though Abu Dhabi’s strong finances suggest it “doesn’t need the money,” the offering allows it to maintain a presence in the market in anticipation that borrowing costs could stay elevated at a time when geopolitical risks are sharply on the rise, according to Mehdi Popotte, senior portfolio manager at Arqaam Capital.
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