Abu Dhabi completes $2bn bond issuance

Securities well received by investors, emirate's media office says

A general view of Abu Dhabi in the UAE which remains under the UK's red list for travel. Victor Besa / The National

Abu Dhabi completed a $2 billion bond issuance with a seven-year tenor, the emirate's media office said late on Wednesday.

The issuance recorded the tightest-ever yield for an emerging market sovereign.

"The bonds were well received by fixed income investors, including US investment grade corporates and portfolios, effectively expanding the investor base," Abu Dhabi Media Office said.

The issuance was oversubscribed by over three and a half times.

Sovereigns and semi-government companies in the region are looking to raise debt to take advantage of low interest rates.

In June 2020, Abu Dhabi reopened the $7bn multi-tranche international bond offering with a $3bn tap issue.

A tap issue allows borrowers to sell short-term debt instruments from past issues.

Before that, Abu Dhabi raised a $10bn bond in September 2019.

Abu Dhabi’s economy is expected to recover this year, with higher oil prices and an improvement in economic activity as the effects of the pandemic abate.

The emirate’s real gross domestic product is expected to recover to 2019 levels by 2023, S&P estimates.

This week, the ratings agency also confirmed Abu Dhabi's investment grade rating, due to the resilience of its economic fundamentals and large fiscal buffers supported by revenue from the hydrocarbon sector.

The emirate's "AA/Stable/A-1+" rating and stable outlook reflect the credit rating agency’s expectation that its fiscal position will remain robust over the next two years.