Abu Dhabi is set to raise $3 billion from selling dollar bonds in its first debt offering of the year.
The oil-rich emirate — the largest of seven in the United Arab Emirates — will issue five- and 10-year notes, according to a person familiar with the matter who asked not to be identified. Final spreads for both tranches are about 30 basis points below initial price thoughts, the person added. Order books peaked at more than $12.7 billion.
Abu Dhabi joins a slew of Gulf issuers who have already tapped debt markets this year to take advantage of favorable rate conditions and strong demand. It’s also been a busy year for sovereign issuers in emerging markets, with Saudi Arabia selling more than $10 billion worth of bonds. Israel and Turkey have each priced around $6 billion of notes.
Borrowing by Abu Dhabi’s government-related entities is expected to gradually increase to fund ambitious plans to further develop its non-hydrocarbon economy, Fitch Ratings said. The agency notes the emirate maintains a low ratio of debt to gross domestic product — at 17.4% at the end of 2024, it’s well below the peer median of 48.8%.
Abu Dhabi issued $3.8 billion of eurobonds last year, while the emirate’s banks, companies and wealth funds raised about $15 billion.
JPMorgan Chase & Co. said earlier this week that it will remove the United Arab Emirates from its emerging-market bond indexes by June, after the Middle Eastern nation exceeded the bank’s measures of wealth for three successive years. The UAE accounts for 4.1% of the JPMorgan’s global diversified EM bond universe.
JPMorgan’s removal of the UAE from its index is likely to trigger brief bond underperformance, similar to Qatar’s experience, but inflows from developed-market crossover investors and local buyers may offset the impact, making the overall effect largely negligible.
The bonds are expected to be rated AA by both S&P Global Ratings and Fitch Ratings, the person said. That is two notches above France.
BNP Paribas SA, Emirates NBD Capital Ltd, First Abu Dhabi Bank PJSC, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Standard Chartered Bank Plc are the joint global coordinators for the sale.
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