The Emirate of Abu Dhabi announced the issuance of multi-layer sovereign bonds on April 8, with a total value of 7 billion US dollars, attracting strong interest from international investors.
The issuance is part of Abu Dhabi's medium-term strategy aimed at strengthening the emirate's capital structure ... 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 To finance and at the same time maintain current credit ratings, as Abu Dhabi is the only economy with an AA rating in the region, which establishes its distinguished credit standing.
The sovereign bonds were 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, 6.3 times the offer size of the issuance, 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 balance sheet flexibility, backed 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 turnout 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 witnessed by the offering reflects the investors’ continued confidence in our ability to achieve sustainable economic growth, especially in light of times of uncertainty in the world and declining oil prices. Our solid credit fundamentals and strong credit ratings coupled with a stable outlook have enabled us to attract a diverse group of investors from international lending capital markets. ”
His Excellency added: "The public debt file for the emirate remains strong, as evidenced by the decrease in direct government debt, which led to providing 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 head debt market. Money is in line with our financial strategy Our debt management strategy is an essential component of Abu Dhabi's economic development, as well as its support for the economic vision of the Emirate of Abu Dhabi 2030. ”
Despite the economic challenges facing the entire world in 2020, Abu Dhabi remains at the forefront of countries offering sovereign bonds at the lowest interest rates in the Middle East.