Abu Dhabi Expects to Raise $10 Billion From Dollar Debt Sale

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  • Mandates BofA, Citi, HSBC, FAB, JPM to arrange the bond sale
  • Abu Dhabi plans to raise in five-, 10-, 30-year tranches

Abu Dhabi Considers Raising $10B From Bond Sale

Abu Dhabi, home to about 6 percent of the world’s oil reserves, aims to raise $10 billion from a dollar bond sale as early as Tuesday to help plug a budget deficit.

Encouraged by Saudi Arabia’s $12.5 billion sale last week, the biggest sovereign deal in emerging markets this year, Abu Dhabi opened books on Monday for a three-part offering ranging from five to 30 years, people familiar with the matter said, declining not to be identified because the talks are private. Order books closed in excess of $30 billion, the people said.

The final price guidance is as follows:

  • About 70 basis points over Treasuries for debt due October 2022, give or take 5 basis points
  • A spread of roughly 90 basis points for debt due in 2027
  • Around 135 basis points over the benchmark for bonds maturing 2047

“That looks very generous versus the existing securities and we expect that pricing will tighten significantly,” Credit Sights wrote in a note published on Monday. “Qatar trades significantly outside Abu Dhabi at shorter dated maturities and we wouldn’t be surprised to see the Abu Dhabi 30 year tighten by around 40 basis points at the final pricing.”

Gulf Cooperation Council states, which includes the biggest Arab economy of Saudi Arabia, are selling debt as regional governments seek to bridge budget deficits brought on by low oil prices. Abu Dhabi, whose debt carries the third-highest investment grade at S&P Global Ratings, raised $5 billion in April 2016, its first bond sale in seven years.

The debt offering this week spurred a nine-basis-point increase in the yield on Abu Dhabi’s existing dollar bonds due 2021 on Monday, the most since November, to 2.27 percent.

The capital of the United Arab Emirates mandated Bank of America Merrill Lynch, Citigroup Inc., First Abu Dhabi Bank PJSC, HSBC Holdings Plc, and JPMorgan Chase & Co. as joint lead managers and bookrunners to organize the calls.

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