The Emirate of Abu Dhabi issued sovereign multi-tiered bonds on May 19, 2020, with a total value of $ 3 billion, by reopening its recently launched bond issuance program.
The issuance of bonds benefited from the favorable conditions of the debt market, and achieved the lowest level of returns in the countries of the Gulf Cooperation Council for each of the three segments, which consisted of a slide valued at one billion US dollars for a period of 5 years, a slide with a value of one billion dollars for 10 years, and a slide worth one billion dollars for 30 years .
This issue is considered a continuation of the sovereign bonds that Abu Dhabi successfully launched in April 2020, with a total value of seven billion dollars, while the subscription level reached 6.3 times the amount offered for issuance from more than 100 unique accounts, to be reflected in the exceptional demand for sovereign bonds For the emirate.
The success of the first issuance of this type of bond in Abu Dhabi, with an underwriting level that exceeded 7 times the amount offered for sale, confirms the strength of the emirate's proactive strategy in managing public debt, which focuses on strengthening the capital structure, in addition to maintaining the emirate at low levels of debt, the total public debt It has 12.1% of GDP at the end of 2019, which is considered one of the lowest in the world, which confirms the efficiency of the financial policies and wise debt management of the emirate.
The 30-year segment has received excellent approval from international investors, who made up 98% of the final geographical allocation of this segment, which confirms the investors' confidence in Abu Dhabi's ability to achieve sustainable economic growth in the long run.
Abu Dhabi continues to be the only sovereign entity in the region to have a sovereign credit rating of AA.
The emirate’s net assets, which exceed 200% of GDP, despite the recent drop in oil prices, ensure that Abu Dhabi remains in a strong position enabling it to take advantage of the window of opportunity available in the market.
"The economy of Abu Dhabi remains immune to external turmoil, including fluctuations in oil prices and other repercussions of the (Covid-19) virus, and despite the market turmoil caused by the epidemic, we are still in a position Strong, thanks to the balance sheet flexibility, backed by low levels of debt and solid fixed assets, including two of the world's largest sovereign funds. ”
He added: "We appreciate the continued investor confidence, which is a testament to our solid credit foundations and our proven capabilities in continuing economic growth. Success in offering debt issuance and achieving historical low returns confirms the success of our fortified financial strategy, especially in light of the adverse winds that afflict the macro economy." This strategy has enabled us to maintain low levels of direct public debt, and Abu Dhabi has the ability to increase the debt ceiling in a strategic manner when market conditions provide an opportunity to do so. Therefore, we are trying to take advantage of the window of opportunities available in the market, as part of our responsibility to preserve the emirate’s wealth ".
He continued: "The issuance of Abu Dhabi sovereign bonds will accelerate the growth of the non-hydrocarbon sector in order to build a resilient and sustainable economy in the post (Covid-19) period in line with Abu Dhabi Economic Vision 2030."
The bonds were priced at 135 basis points for a 5-year term, 165 basis points for a 10-year term, and 182.9 basis points for a 30-year term above the rate of return on US Treasury bonds.
BNP Paribas, First Abu Dhabi Bank, GB Morgan and Standard Chartered worked as underwriting managers and joint collectors.