The UAE government is to issue its first-ever federal government bond, according to banking industry sources. Although the size and tenure of the debut issue are not clear, bankers indicated that there will be a dual-tranche dollar-denominated issuance that will mature in 10 years and 20 years, respectively.

A Bloomberg report on Monday said, there will also be a 40-year dual-listed Formosa bond – debt issued in Taiwan and denominated in a currency other than the New Taiwan Dollar.

At the Federal level, this is the first UAE government bond issuance although individual emirates have their own government bond programs. The federal government bond issuance follows the UAE government’s 2018 law permitting the federal government to begin issuing sovereign debt.

Abu Dhabi Commercial Bank, BofA Securities, Citigroup Inc., Emirates NBD Capital, First Abu Dhabi Bank, HSBC Holdings Plc, JPMorgan Chase & Co., Mashreqbank, and Standard Chartered Bank are managing the UAE bond sale.


Why is the federal government selling bonds?

The UAE has been planning the issuance of federal government bonds for the past several years. A federal government bond program will create a benchmark for other government, semi-government, and corporate issuers in the country.


Notes representing drawdowns from the program may be denominated in various currencies and consist of different maturities. The Government intends to use the net proceeds from each issuance for general budgetary purposes in compliance with its public debt strategy, including the financing of infrastructure projects and investment by the Emirates Investment Authority, according to Moody’s.


Moody’s has assigned a foreign currency senior unsecured program rating of (P)Aa2 to the Government’s global medium-term note program. It had affirmed the Aa2 long-term issuer rating of the Government in May with a stable outlook, while Fitch Ratings had assigned a Long-Term Foreign-Currency Issuer Default Rating at ‘AA-’ with a stable outlook. The UAE’s rating is supported by unconditional support from Abu Dhabi.


The stable outlook reflects broadly balanced risks, consistent with the stable outlook on Abu Dhabi’s sovereign rating. World-leading progress in vaccinations supports the UAE’s economic recovery, limiting the impact of the pandemic on its credit metrics.

Source: UAE taps global markets with first ‘federal bond’ | Markets – Gulf News