Emirates Development Bank launches $750m bond, first issue under new debt law

UAE government approved the law last year to help state entities tap international capital markets

Abu Dhabi, U.A.E., January 30, 2018.  Monthly FNC council meeting.  H.E. Obaid Humaid Al Tayer is Minister of State for Financial Affairs of the UAE.
Victor Besa / The National
REPORTER: Haneen Dajani
Powered by automated translation

Emirates Development Bank, a UAE government-owned lender tasked with lending activities, issued a debut $750 million bond, becoming the first federal entity to tap the international capital markets under the newly launched debt law.

The five-year bond, which has a 3.516 per cent coupon rate, was nearly five times oversubscribed and was issued under the bank’s new $3 billion Euro Medium Term Note (EMTN) programme, which will boost the bank’s access to capital markets and bolster its funding profile, EDB said in a statement on Saturday.

“EDB is a key player in the UAE’s financial sector, through its introduction of specialised services to grow the nation’s economy,” said Obaid Al Tayer, Minister of State for Financial Affairs and chairman of the EDB's board of directors. “This deal establishes a tightly priced and liquid benchmark for EDB, and formed an important objective as the first Federal Entity to issue bonds from the UAE.”

Last year the UAE issued a law permitting the Federal Government to issue sovereign debt for the first time, helping to boost banking liquidity and enable individual emirates to benefit from higher issuer ratings than they could achieve on their own.

Under the law, UAE banks will be able to purchase government bonds in dirhams or foreign currencies, which will help them comply with international Basel III banking requirements, the Ministry of Finance said in October.

Abu Dhabi, Sharjah and Dubai already sell bonds in international markets.

The investor base of EBD's bond buyers was diverse with 36 per cent representing the Middle East, 22 per cent from Europe, and 42 per cent representing Asian markets.

Emirates NBD Capital was the sole financial advisor and a joint global coordinator on the transaction. Standard Chartered Bank also acted as joint global coordinators. Emirates NBD Capital, and the Dubai branch of Industrial and Commercial Bank of China, Standard Chartered Bank and Union National Bank acted as joint lead managers on the transaction.

EBD launched last month a Dh100m ‘Credit Guarantee Scheme’ for small- and medium-sized enterprises, supporting the goals of the National Agenda under UAE Vision 2021, which focuses on boosting the contribution of SMEs to the country’s economy.

Under the scheme, EDB will provide a credit guarantee to partner banks in the UAE, guaranteeing the loan amount up to 85 per cent to banks, which can offer up to Dh2m financing to startups. EDB will also offer up to Dh5m financing to existing SMEs where it guarantees up to 70 per cent of their loan amount.