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Tue 10 May 2016 06:47 PM

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Abu Dhabi issues $5bn bonds as it seeks to gap budget deficit

Department of Finance chief says bonds were oversubscribed, with over 600 orders exceeding $17bn

Abu Dhabi issues $5bn bonds as it seeks to gap budget deficit

Abu Dhabi on Tuesday announced that it has issued benchmark dual-tranche 5 and 10 years bonds worth $5 billion as it seeks to gap an expected budget deficit of $10.1 billion in 2016 because of low oil prices.

A statement carried by news agency WAM said the bonds were significantly oversubscribed, with an aggregate of over 600 orders, exceeding $17 billion, with strong demand from both international and regional accounts.

Riyad Al Mubarak, chairman of the Department of Finance Abu Dhabi, said: "We received positive feedback from investors during this process, which serves as a testament to the Emirate’s solid credit standing and the high trust it enjoys in the global market.

"Abu Dhabi’s wise leadership strategy, diversification efforts, successful management of sovereign wealth funds and great strides it has achieved in education, health and infrastructure, have set it as a role model for the region and the world."

The statement said the final geographic allocation for the 10-year bonds was 62 percent foreign investors and 38 percent investors from the Middle East while 53 percent of 5-year bond investors were foreign and 47 percent were from the Middle East. 

Mubarak added: "The emirate has adopted a prudent, model for comprehensive development over the course of more than five decades, by adopting balanced fiscal policy and building a solid budget for the public sector and maintaining moderate level of public debt, which has led to strong credit profile and large fiscal buffers, resulted in boosting the economic growth and stability of the Abu Dhabi Emirate in particular, and the UAE in general."

Bank of America Merrill Lynch, Citigroup and JP Morgan were joint lead managers and joint bookrunners. Abu Dhabi Commercial Bank, National Bank of Abu Dhabi and First Gulf Bank were co-managers of the issue.