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The United Arab Emirates has issued its first Eurobonds since September, offering investors 10-year dollar debt. The UAE priced $1.5 billion with a spread 60 basis points above the US Treasury curve, following demand that surpassed $5.75 billion, according to a source familiar with the deal. Rated Aa2 by Moody's Investors Service, on par with the UK and South Korea, the oil-rich UAE holds one of the highest credit ratings among sovereigns. This marks only the fourth Eurobond issued by the country as a federal entity. Earlier in April, Abu Dhabi sold $5 billion of debt, with the 10-year portion priced at a yield of 5.04% and a spread of 45 basis points over US Treasuries, now trading around 4.8%.
- "It might just be to remain in the market, to keep the curve liquid," said Zeina Rizk, co-head of fixed income at Amwal Capital Partners in Dubai. Gulf nations have been particularly active in the international bond market this year, with Saudi Arabia, Qatar, and Bahrain also issuing significant debt. The main banks arranging the UAE’s bond include Credit Agricole SA, Emirates NBD Bank PJSC, First Abu Dhabi Bank PJSC, HSBC Holdings Plc, JPMorgan Chase & Co., and Standard Chartered Plc.
Why it matters
Despite its wealth from high oil and natural-gas revenues, the UAE’s new bond deal may be aimed at enhancing liquidity in the debt market.
