UAE plans first sovereign bond issue

A law will soon be passed that will enable the country to source outside funding for infrastructure and other spending.

ABU DHABI // The UAE plans to issue its first sovereign bond to fund infrastructure and other spending, following issues by Abu Dhabi and Dubai, a senior finance ministry official said on Sunday. "A law will come out soon and it will specify where the debt must be spent. One (area)... is infrastructure," Younis al Khoori, director general at the ministry of finance told Reuters. The government, the world's third-largest oil exporter, has not yet determined the timeframe or the size of the issue, Mr Khoori said. The UAE is a federation of seven emirates including Abu Dhabi, the main oil producer in the OPEC country, and regional trade and tourism hub Dubai. Abu Dhabi raised $3 billion in late March as part of a $10 billion bond programme planned over the next two years for general government spending. Dubai sold $10 billion of bonds to the UAE central bank in February and is planning to raise another $10 billion to support state-linked companies struggling to weather the financial crisis and a real estate slump. The ministry of finance will handle the debut bond issue on behalf of the federal government and plans to appoint an advisor and seek a sovereign rating, Mr Khoori said. States and corporates in the Gulf Arab region, including Abu Dhabi, raised over $15 billion in bonds in the last four months and are eyeing more issues as spreads narrow and demand rises for high-rated emerging market debt. *Reuters