Friday 3 December 2021

UAE closes multi-tranche sovereign bond package

ABU DHABI, October 13, 2021

The UAE Government, represented by the Ministry of Finance (MoF), has successfully closed its offering of a US dollar-denominated multi-tranche sovereign bond package, which comprised medium and long-term tranches: a 10-year tranche, a 20-year tranche, in addition to a 40-year dual-listed Formosa tranche with a total value of $4 billion.
The announcement was made during a virtual media briefing held by the Ministry of Finance, where Younis Haji Al Khoori, Undersecretary of Ministry of Finance previewed the results of the subscription to the country’s sovereign bonds.
These bonds were priced on October 6, 2021, and will be settled on October 19, 2021, with their tranches distributed as follows:
*The 10-year tranche bonds were sold at USD 1 billion at a spread of 70bps over US Treasuries. 
*The 20-year tranche bonds were sold at USD 1 billion at a spread of 105bps over US Treasuries, creating a new standard for bond issuers, especially since the United Arab Emirates is the first-ever sovereign to do a US dollar benchmark issuance in the 20-year tenor in the GCC. 
*The 40-year Formosa tranche USD 2 billion 3.250 per cent. The Formosa bond is debt sold in Taiwan by foreign borrowers and denominated in currencies other than the Taiwanese dollar. The 40-year Formosa tranche achieved the highest ever distribution into Asia for a long-dated US dollar benchmark issuance by a sovereign, with over 70% of the bonds placed with Asian investors. 
Al Khoori pointed out the successful subscription of the three tranches, which achieved the lowest-ever yield for a debut sovereign from the GCC - a testament to the credit strengths of the UAE. His Excellency said: “The government bond tranches offered raised USD 4 billion, while global books peaked at USD 22.5 billion, representing a 5.6x oversubscription. The orderbook momentum increased the deal size to $4 billion from the initial target of $3 billion.”
He said: "The UAE issued these bonds to contribute to the development of the bond market and find investment alternatives for investors. The high demand of investors for these bonds reaffirms the UAE’s strong credit rate, and its ability to overcome all crises, foremost of which is the repercussions of the Covid-19 pandemic." 
"The International Monetary Fund forecasts the UAE’s economy to grow by 3.1 per cent in 2021, and the Central Bank of the UAE estimates a 4.2 per cent growth in 2022," he added.-TradeArabia News Service


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