2.2 billion dirhams of “dollar bonds” destined for “Etihad Train” and infrastructure projects

«Finance»: Issuing bonds in dirhams in which citizens and residents invest

  • The Ministry of Finance confirmed that the issuance of bonds in local currency will not be in 2021. À Archive

  • Younis Al-Khoury: "Issuing bonds is not to cover a deficit...and does not constitute a burden on the budget."

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The Undersecretary of the Ministry of Finance, Younis Haji Al-Khoury, said that the ministry is currently studying, in cooperation with the Central Bank, a team from the World Bank and a team of private consulting companies, the issuance of government bonds denominated in the local currency, the dirham, with a rewarding return and a strong rating, which constitutes investment opportunities for citizens and residents in The state, explaining that the issuance of bonds in local currency will not be in 2021, but as soon as the studies are completed, they will be announced.

This came during a media briefing held by the Ministry of Finance using videoconferencing technology, during which Al-Khoury reviewed the results of the subscription to sovereign state bonds.

big success

Al Khouri confirmed that the UAE government, represented by the Ministry of Finance, closed its offering of the multi-tranche sovereign bond package denominated in US dollars with great success, which included conventional medium and long-term tranches with a duration of 10 and 20 years, in addition to a tranche of dual-listed Formosa bonds for a period of 40 years with a total value of 40 years. It reached four billion dollars.

strategy

Al-Khoury pointed out that the Ministry of Finance has developed a clear general strategy for managing the public debt, which will be between sustainable and stable, and will not constitute significant burdens on the public budget, but the issuance came as a result of international and banking requirements that there be completion in the global investment cycle by creating investment channels for global investors The UAE, stressing that the issuance of these bonds did not come to cover a budget deficit.

He explained that 15% of the proceeds of these bonds, amounting to 2.2 billion dirhams, will be directed to the Etihad Rail project, along with a number of infrastructure projects, while the remaining 85% will be invested with the possibility of using it during the coming years when needed.

Goal

Regarding the purpose of issuing these bonds, Al-Khoury stated that “the state aimed at issuing bonds to contribute to the development of the bond market, and to find investment alternatives for investors.”

merit

He pointed out that investors' interest and great demand for these bonds confirms the merit and the high credit standing of the state, and its ability to overcome all crises, foremost of which is the effects of the "Covid-19" pandemic, where the UAE economy is expected to grow by 3.1% during the current year, according to According to International Monetary Fund estimates, the Central Bank expects the country's economy to grow by 4.2% in 2022.

Al Khouri confirmed that the bonds attracted the attention of international and regional investors alike, as the peak order book amounted to more than $22.5 billion excluding the interest of “JLMs” (the co-managers of the subscription) and an increase in the size of the offering at a rate of “5.6x”.

• The UAE government has successfully closed its offering of a package of dollar-denominated bonds.

Two main steps

The Undersecretary of the Ministry of Finance, Younes Haji Al-Khoury, explained that the Ministry of Finance relied, in its strategy to issue sovereign bonds, on two main steps, the first is the implementation of a promotional offer that is not related to the deal weeks before the issuance of the bonds, followed by holding calls with investors after the announcement of the bonds for dialogue and answering their inquiries.

He said that this strategy contributed to the success of the IPO and the extrapolation of investor interest prior to the offering, noting that Taiwanese investors had registered a strong demand for the 40-year "Formosa" segment, prior to the official opening of the order book.


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Keywords: ministry of finance, issuance, central bank, currency, consulting companies, cooperation, finance, the undersecretary, rating, bonds, government bonds, younis haji al-khoury, dirhams, dirham, government