2024-04-24 06:57:40
Collection Abu Dhabi $5 billion from its first international bond issue since 2021, making it one of the largest deals Debts in emerging markets this year.
The capital of the United Arab Emirates, rich in oil revenues, has issued bonds with maturities of 5, 10 and 30 years. Final yields were well below the indicative yield announced when the offering began yesterday morning, Tuesday, indicating strong investor interest in the offering.
From the start of this year to date, emerging market governments have issued the equivalent of $100 billion in dollar and euro-denominated bonds, making it one of the busiest years in bond issuance, according to data compiled by Bloomberg.
Abu Dhabi has a good credit rating
The recent shift in global interest rate expectations has driven up borrowing costs for issuers of dollar-denominated debt, with traders now expecting fewer cuts from the U.S. Federal Reserve this year as progress in the fight once morest inflation falters.
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However, despite this, Abu Dhabi enjoys an “AA” rating from the “S&P” rating agency, like the United Kingdom, France and Qatar, which allows it to participate in the market without having to increase its bond yields.
New Abu Dhabi bonds return
The value of the 5-year bonds is $1.75 billion and their yields are regarding 35 basis points higher than those of U.S. Treasuries, reaching 4.97%. While the initial price of the yields of this tranche reached 70 basis points above the American bonds.
Read more: Abu Dhabi set to issue first international bonds in 3 years
The longest tranche (30-year term) was also worth $1.75 billion, with a yield margin of 90 basis points over U.S. Treasuries, reaching 5.62%.
Before announcing the final terms of the offer, Mehdi Boubot, senior portfolio manager at Arqaam Capital, said that while Abu Dhabi’s strong financial resources indicate it “does not need to borrow” , the offer allows it to strengthen its presence on the market.
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