UAE sovereign bonds attract $15 billion

UAE sovereign bonds attract $15 billion
UAE sovereign bonds attract $15 billion

Abu Dhabi (Al-Ittihad) The government of the United Arab Emirates, represented by the Ministry of Finance, announced the closing of its offering of a two-tranche dollar-denominated sovereign bond package with great success. 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 sovereign bond package included a 10-year medium-term tranche and a 30-year Formosa bond. The bond package was priced on June 23, 2022, to be issued on July 07, so that its tranches are distributed as follows: – The 10-year tranche of $1.75 billion at 100 basis points above the US Treasury bond yield, with a final coupon rate of 4.050% . This tranche is scheduled to be listed on the London Stock Exchange and on Nasdaq Dubai. – Formosa 30-year tranche, worth $1.25 billion at 175 basis points above the yield of US Treasury bonds, and at a final coupon rate of 4.951%. This chip is in the London Stock Exchange, the Taipei Stock Exchange and Nasdaq Dubai. 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 extent of the 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 in all its segments reaching nearly $15 billion during the day, an increase of nearly 5 times the size of the issuance, the issue size was increased to $3 billion. 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 US Treasury bond yield on 10-year bonds, and 175 basis points above the US Treasury bond yield on 30-year bonds. ». His Excellency 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 the multiple investment opportunities and the security afforded to them and the distinguished investment climate in the country.” His Excellency 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.

The article is in Arabic

Tags: UAE sovereign bonds attract billion

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