September 23, 2019 / 6:20 AM / 25 days ago

UPDATE 2-Abu Dhabi raises $10 billion with triple-tranche bond

(Recasts, updates with size of the deal, final spreads)

By Davide Barbuscia

Sept 23 (Reuters) - The government of Abu Dhabi has sold $10 billion in bonds, its first debt issuance in two years, which attracted hefty demand as the oil-rich emirate takes advantage of low rates to partly offset the impact of falling oil prices on state coffers.

Abu Dhabi has issued $3 billion in five-year bonds, $3 billion in 10-year and $4 billion in 30-year notes, according to a document issued by one of the banks leading the deal and seen by Reuters.

Abu Dhabi, the capital of the United Arab Emirates (UAE), has the biggest hydrocarbon reserves among the UAE’s seven emirates and its fiscal position is among the strongest in the region.

It has a rating of Aa2 by rating agency Moody’s, AA by S&P and AA by Fitch, with stable outlooks assigned by all three rating agencies.

BNP Paribas, Citigroup, First Abu Dhabi Bank, HSBC, JP Morgan and MUFG were mandated as joint lead managers and joint bookrunners for the 144A Reg S senior unsecured bonds, according to the document.

A 144A lets a non-U.S. issuer tap the U.S. market without registering on a U.S. exchange, while a Regulation S offering is a bond issued in the Eurobond market for international investors,

Abu Dhabi started marketing the five-year notes at around 80 basis points over U.S. treasuries, the 10-year at around 100 bps over the same benchmark, and the 30-year at around 125 bps over.

High demand - in excess of $19 billion - meant the emirate was able to reduce those spreads by 15 basis points across all the tranches during the marketing process on Monday.

Reuters, citing sources, had reported earlier this month that Abu Dhabi was planning to issue U.S. dollar-denominated bonds this year.

The public debt issuance is the emirate’s first since 2017.

Governments in the Gulf Cooperation Council region have borrowed billions of dollars globally over the past few years to refill state coffers hit by lower oil prices.

The UAE central bank on Sunday said the country’s economy is expected to grow 2.4% in 2019, driven by faster growth in the oil sector, above 1.7% in 2018.

Reporting by Davide Barbuscia; Writing by Saeed Azhar Editing by Louise Heavens & Shri Navaratnam

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