Abu Dhabi completes $3bn tap issue from its April bond offering

The bond issuance was oversubscribed more than seven times, receiving strong interest from international investors

Abu Dhabi's tap issue is a continuation of its $7bn bond offering in April. Reuters

Abu Dhabi reopened its recent $7 billion (Dh25.7bn) multi-tranche international bond offering with a $3bn tap issue, the Abu Dhabi Department of Finance said on Tuesday.

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

The department said the bond tap capitalised on favourable debt market conditions, with pricing at historic low yields in the GCC across the 5-year, 10-year and 30-year tranches.

The bond issuance was oversubscribed more than seven times with international investors accounting for 98 per cent of the order book.

Abu Dhabi's issuance comes as sovereigns and quasi-government companies in the region look to raise debt to take advantage of the low interest rate environment, as they shore up finances amid lower oil prices and the coronavirus pandemic that has infected more than 6.3 million people globally. Central banks have cut rates to encourage lending.

Despite a challenging global economic backdrop, Abu Dhabi remains the highest priced sovereign from the region, according to the Department of Finance.

"The emirate maintains conservative levels of debt, with total government debt at 12.1 per cent of gross domestic product at the end of 2019, amongst the lowest in the world and testament to the emirate’s prudent fiscal and debt management policies," Abu Dhabi's department of finance said.

Prior to its $7bn multi-tranche bond offering in April, Abu Dhabi tapped the debt markets in September 2019, and raised $10bn. The deal was more than two-and-a-half times oversubscribed, peaking at $25bn, it said at the time.