The UAE, the Arab world’s second-largest economy, raised $4 billion through the issuance of multi-tranche sovereign bonds with part of the proceeds earmarked for financing infrastructure projects, according to the Ministry of Finance.
This is the first time the country has issued bonds at the federal level, as it seeks to raise fresh funding amid a global low-interest rate environment.
“The UAE issued these bonds to achieve the country's strategy to build the Treasury yield curve and start issuing in the future Emirati dirham-denominated bonds,” Younis Al Khoori, undersecretary at the Ministry of Finance, said on Wednesday.
“Some proceeds of the issuance will be used to provide financing to infrastructure projects according to the government’s relevant needs, while not exceeding 15 per cent of the direct and indirect public debt.”
The bond package, which is denominated in US dollars, included conventional medium and long-term 10 and 20-year tranches, as well as 40-year dual-listed Formosa bonds, the Ministry of Finance said.
Formosa bonds refer to debt issued in Taiwan by foreign borrowers in currencies other than the Taiwanese dollar. The total orders for the UAE’s debut bond deal topped $22.5bn.
“These results reaffirm the UAE’s sound government policies and comprehensive economic and social development path, which included devising a solid balance sheet for the union and a low level of government debt, while enhancing the skills of human talent and excelling in the efficient management of economic projects,” Mr Al Khoori said.
The latest development comes as Moody's Investors Service assigned a (P) Aa2 foreign currency senior unsecured rating to the UAE government’s global medium-term note programme last month, citing the country's high per capita income, large hydrocarbon reserves and domestic political stability.
Aa2 is the third-highest long-term credit rating that Moody's assigns to fixed-income securities like government bonds, denoting their low credit risk.
Moody’s said it expects “Abu Dhabi's balance sheet to remain among the strongest in the Gulf Cooperation Council (GCC) and the UAE's nominal GDP to recover to pre-pandemic levels over the next two to three years".
The country also plans to issue more dollar-denominated bonds in 2022 but the size was not disclosed.
“Definitely, there would be … issuances from the Ministry of Finance and the size and the time, we will look at it with our advisers and stakeholders,” Mr Al Khoori said.
Individual emirates are free to issue debt according to their own needs and priorities, he said. The UAE will also be looking at issuing bonds in the local currency.
The UAE’s economy has continued to recover from the impact of the coronavirus pandemic, helped by higher oil prices and a rebound in tourism and economic activity generated by the delayed Expo 2020 Dubai.
The country’s economy is expected to grow 3.1 per cent in 2021, according to the International Monetary Fund. That is higher than the Central Bank of the UAE's estimate, which projects the country’s economy will expand 2.1 per cent this year and 4.2 per cent in 2022.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Sun jukebox
Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)
This rip-off of Leiber/Stoller’s early rock stomper brought a lawsuit against Phillips and necessitated Presley’s premature sale to RCA.
Elvis Presley, Mystery Train (1955)
The B-side of Presley’s final single for Sun bops with a drummer-less groove.
Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)
Originally recorded for Sun, Cash’s signature tune was performed for inmates of the titular prison 13 years later.
Carl Perkins, Blue Suede Shoes (1956)
Within a month of Sun’s February release Elvis had his version out on RCA.
Roy Orbison, Ooby Dooby (1956)
An essential piece of irreverent juvenilia from Orbison.
Jerry Lee Lewis, Great Balls of Fire (1957)
Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.
A Prayer Before Dawn
Director: Jean-Stephane Sauvaire
Starring: Joe Cole, Somluck Kamsing, Panya Yimmumphai
Three stars
Past winners of the Abu Dhabi Grand Prix
2016 Lewis Hamilton (Mercedes-GP)
2015 Nico Rosberg (Mercedes-GP)
2014 Lewis Hamilton (Mercedes-GP)
2013 Sebastian Vettel (Red Bull Racing)
2012 Kimi Raikkonen (Lotus)
2011 Lewis Hamilton (McLaren)
2010 Sebastian Vettel (Red Bull Racing)
2009 Sebastian Vettel (Red Bull Racing)
More from Neighbourhood Watch:
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Persuasion
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