Abu Dhabi Completes $5bn Bond Issue To Support Non-oil Expansion

Abu Dhabi has announced it has successfully completed a $5 billion multi-tranche bond offering to allow the emirate to focus on sustaining non-hydrocarbon sector expansion.

Underpinned by strong investor appetite, the bonds are priced at historic low yields and the issuance comprises three tranches - a $2 billion 3-year tranche, a $1.5 billion long 10-year tranche, and a $1.5 billion 50-year tranche.

The 50-year tranche is the longest term for a bond issued by a GCC sovereign issuer, a statement said.

The bond issuance was 4.8 times oversubscribed at peak orderbook, with orders coming from over 60 new accounts and an orderbook which peaked at $24 billion, it added.

The 50-year bonds were particularly well received by international investors, who accounted for 95 percent of the final geographical allocation, showcasing trust in Abu Dhabi’s ability to deliver sustained, long-term economic growth.

Jassem Mohammed Buatabh Al Zaabi, chairman of the Abu Dhabi Department of Finance, said: “The success of this bond issuance, in the midst of the Covid-19 global crisis, demonstrates the robust credit fundamentals and more broadly the strength of Abu Dhabi’s economy. The 50-year tranche is a first for not just Abu Dhabi but also for the GCC, and a reflection of formidable investor confidence in our economy, credit strength and long-term outlook.”

He added: “Abu Dhabi has proven its resilience throughout a global challenging economic period. As the UAE prepares for the next 50 years, through its ‘2020: Towards the next 50’ initiative, we are committed to supporting the wise leadership’s national strategy by instilling a culture of fiscal sustainability.”

Citi, Deutsche Bank, First Abu Dhabi Bank, Morgan Stanley, and Standard Chartered were Joint Lead Managers and Joint Bookrunners.

It was reported earlier this week that Dubai is in talks with banks for a possible sale of Islamic bonds in dollars.

Bloomberg quoted people familiar with the matter as saying the emirate last week sent a request for proposals for a benchmark sukuk offering.

A final decision hasn’t been made and Dubai may decide not to tap the market.