Abu Dhabi issued multi-tranche sovereign bonds on April 8th, at a value of USD 7 billion.
According to the Emirates News Agency, the issuance is part of Abu Dhabi’s medium-term strategy aimed at strengthening the emirate’s capital structure, and the strong turnout reflects continued investor confidence in the emirate’s established credit standing.
The Emirate of Abu Dhabi has a strong balance sheet and a high ability to issue debt securities as part of the public debt management process as a result of decades of careful and balanced financial management .. This ability has led to the development of a medium-term global bond strategy .. One of the most prominent components of this strategy is access to various sources of financing At the same time, maintaining the current credit ratings, as Abu Dhabi is the only economy with an AA rating in the region, which establishes its distinguished credit standing.
Sovereign bonds have been divided into three segments: a $ 2 billion tranche for 5 years, a $ 2 billion tranche for 10 years, and a $ 3 billion tranche for 30 years.
The order book exceeded the $ 45 billion barrier, which was 6.3 times the offer size of the issue from more than 100 new investment accounts, setting a new record for Abu Dhabi.
The great confidence in the credit record of the Abu Dhabi government was reflected in the exceptional demand for the emirate's sovereign bonds, in addition to confidence in its financial strength and the flexibility of the balance sheet, supported by low levels of debt and strong levels of fixed assets .. It is also the seat of two of the largest sovereign wealth funds in the world.
The bonds for a period of 30 years witnessed a great demand from international investors, as they formed 98% of the final geographical allocation to this segment, which shows confidence in the ability of Abu Dhabi to achieve sustainable economic growth in the long term.
The bonds were priced 220, 240, and 271.1 basis points for the 5, 10, and 30 year terms, respectively, above the rate of return on US Treasury bonds.
Commenting on the new issue, His Excellency Jassim Bu Ataba Al-Zaabi, Head of the Department of Finance of the Emirate of Abu Dhabi, said: The great success of the offering reflects the continued confidence of investors in our ability to achieve sustainable economic growth, especially in light of the times of uncertainty in the world and the decline in oil prices .. And it has enabled us Our solid fundamentals of credit and strong credit ratings are associated with a stable outlook, attracting a diverse group of investors from international lending capital markets.
His Excellency added: The emirate's public debt file remains strong, as evidenced by the decrease in direct government debt, which has resulted in great financial flexibility and a better ability to manage public debt .. On this basis, we have tried to take advantage of the opportunity currently available in the capital debt market. ..
