First Abu Dhabi Turns To Sterling In Return To Bond Market

First Abu Dhabi Bank sold the Middle East’s biggest sterling-denominated bond in almost a decade as post-Brexit expectations of a cut in interest rates squeeze borrowing costs in the British currency.

The largest lender in the United Arab Emirates offered a three-year 450 million-pound ($583 million) note at a yield premium of 98 basis points over UK gilts, according to a person familiar with the matter, who asked not to be identified because they’re not authorised to speak about it. The deal attracted around 1.25 billion pounds of orders by midday in London, the person said.

Since the beginning of the year, borrowers have sold a record 37 billion pounds of new debt, lured by falling funding costs. Speculation that the Bank of England will support the economy through post-Brexit uncertainty has driven yields on high-grade corporate debt in the currency 27 basis points lower during 2020 to 1.85%, double the decline in the euro market.

The Abu Dhabi bank’s new sterling bond will be the biggest syndicated deal in the currency out of the Middle East since a 550 million pound note sold by International Petroleum Investment Co. in 2011.

Barclays Plc, First Abu Dhabi Bank PJSC, HSBC Holdings Plc and Nomura Holdings Inc arranged the bond sale.