With a total value of $3 billion

The UAE’s dual-tranche sovereign bond achieves purchase orders that exceed the total subscription value by 5 times

The government of the United Arab Emirates, represented by the Ministry of Finance, announced the closing of its offering of a two-tranche US dollar-denominated sovereign bond package with great success.

The sovereign bond package included a 10-year medium-term tranche and a 30-year Formosa bond.

The total value of the bonds reached $3 billion, with the subscription doubling the total value from the primary target of $1.5 billion, and purchase orders exceeding the subscription value by $15 billion.

The bond package was priced on June 23, 2022, to be issued on July 07, 2022, with its tranches distributed as follows:

1. The 10-year tranche of $1.75 billion at 100 basis points over US Treasury yields, with a final coupon rate of 4.050%.

This tranche is scheduled to be listed on the London Stock Exchange and on Nasdaq Dubai.

2. Formosa 30-year tranche of $1.25 billion at 175 basis points over US Treasury yields, with a final coupon rate of 4.951%. This tranche is scheduled to be listed on the London Stock Exchange, Taipei Stock Exchange and Nasdaq Dubai.

Commenting on the results of the issuance, His Excellency Mohammed bin Hadi Al Husseini, Minister of State for Financial Affairs, stressed that the great demand witnessed by the second subscription of the UAE's sovereign bonds reflects the wide global confidence in the strength, flexibility and stability of the UAE economy.

His Excellency said: "The initial target volume of the subscription was set at $1.5 billion. With the peak demand book for bonds with all its segments reaching nearly $15 billion during the day, an increase of nearly 5 times over the issue size, the issue size was increased to $3 billion. The bond pricing was reduced by 25 basis points from the opening prices of both tranches of bonds, as the final pricing reached 100 basis points above the rate of return on US Treasury bonds on 10-year bonds, and to 175 basis points above the rate of US Treasury bonds on 30 bonds. year."

He added: "The privilege of the new issuance of this deal came less than the market expectations in light of the turbulence it is witnessing, which is an affirmation of the credit strength of the UAE under its wise leadership, and reflects the creditworthiness of the country, and the desire of global investors to take advantage of multiple and safe investment opportunities. offered to them and the distinguished investment climate in the country.”

He said, "Sovereign bonds contribute to enhancing the competitiveness of the UAE in all fields, and support the country's financial and economic policies aimed at achieving comprehensive and sustainable development by diversifying sources of income, attracting foreign investments, and building a multi-opportunity investment environment. The Ministry of Finance will continue to work on developing the financial system." in the country and providing innovative financial tools that will advance the growth of the national economy.”

The Ministry of Finance thanked the authorities responsible for managing the issuance process, namely Abu Dhabi Commercial Bank, Bank of America Securities, Citigroup Global Markets, Emirates NBD Capital, First Abu Dhabi Bank, and Emirates NBD Bank. HSBC, JPMorgan, Mashreq Bank, Standard Chartered and Industrial and Commercial Bank of China.

The geographical allocation of the 10-year tranche was 41% for Middle Eastern investors, 26% for US investors, 21% for Asian investors, 5% for UK investors, and 7% for European investors.

The 30-year geographic allocation of Formosa was 42% for US investors, 17% for Middle Eastern investors, 16% for Asian investors, 16% for UK investors, and 9% for European investors.

The final allocation of investor types in the distribution of 10-year bonds came at 36% for commercial banks and private banks, 50% for investment fund managers, 12% for pension funds and central banks, and 2% for the insurance sector.

As for the final allocation of investor types in the distribution of Formosa bonds for a period of 30 years, 23% for the insurance sector, 61% for investment fund managers, 1% for pension funds and central banks, and 15% for commercial banks and private banks.

It is noteworthy that the UAE was rated AA- by Fitch and Aa2 by Moody's with a stable outlook for the national economy, which reflects the strength and resilience of the country's financial and economic policies and its global leadership position.

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