Abu Dhabi Offers Second Dollar Bond for 2021 Amid Low Yields
(Bloomberg) -- Abu Dhabi returned to international debt markets for the second time this year with a two-part dollar-denominated offering to take advantage of low borrowing costs.
The oil-rich capital of the United Arab Emirates sold $3 billion in 10- and 30-year maturities on Wednesday. The 10-year $1.75 billion tranche priced at 63 basis points over Treasuries, down from an initial price target of 90 basis points. Abu Dhabi also sold $1.25 billion in a 30-year tranche that priced at a 3% yield.
Dovish comments from Federal Reserve Chair Jerome Powell have stoked demand for risky assets, while disappointing U.S. jobs data has dimmed the odds that the central bank will speed up the rollback of its massive bond-buying program, keeping a lid on borrowing costs. The yield on Abu Dhabi’s bond due 2028, which the emirate sold in May, is trading near its all-time low of 1.56% reached at the end of August.
The wealthiest of the seven sheikdoms that make up the UAE, Abu Dhabi has the third-highest debt ratings of AA and Aa2 from S&P Global Ratings and Moody’s Investors Service, respectively.
The UAE is the third-biggest producer in the Organization of Petroleum Exporting Countries, and Brent crude has averaged about $67 a barrel this year, up about 30% from end-December.
The recovery in oil prices is set to help narrow the government’s fiscal gap to an average of 3.4% of gross domestic product between 2021 and 2023, almost half the size of last year’s estimated deficit, according to Moody’s.
BNP Paribas, First Abu Dhabi Bank, JPMorgan, Morgan Stanley and Standard Chartered were the bookrunners for the offering.
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