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Wed 22 Jun 2011 08:36 PM

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Abu Dhabi likely to issue bond in 6-12 months

Senior advisor says emirate is considering issuing international bond of at least $1bn

Abu Dhabi likely to issue bond in 6-12 months
Abu Dhabi

Abu Dhabi is likely to issue an international bond in the next 6-12 months and is considering a debt ceiling for the emirate and major government-related borrowers, a debt official said on Wednesday.

"I would expect we would come to the market within the next 6 to 12 months to refresh our benchmarks in the dollar market...5 or 10-year would be the natural thing to do for us," Lars Boman, senior adviser at Abu Dhabi's Debt Management Office, told a Euromoney conference.

The likely size would be "at least a billion" dollars, he later told reporters on the sidelines of the conference.

Abu Dhabi is seen finding favour among investors as a safe haven due to unrest elsewhere in the Middle East and North Africa region.

The emirate is trying to curtail bond sales by state entities and centralise fundraising through the debt management office in a bid to crackdown on undisciplined issuance.

Abu Dhabi's International Petroleum Investment Co (IPIC) held non-deal investor meetings last week and said it would coordinate any future issuance with the emirate's debt management office.

Its Tourism Development & Investment Co. (TDIC) has also appointed banks to sell bonds from its existing $3 billion bond programme, with roadshows planned in the last week of June or early July, sources told Reuters last week.

Abu Dhabi is considering placing a ceiling on the amount of debt issued by such companies, to avoid oversupply, Boman said.

"We think there could be that kind of thing, maybe a bit more of a soft ceiling, it's difficult to say right now," he said, adding that an announcement on this was likely before Abu Dhabi issued further bonds of its own.

Abu Dhabi and key government-related borrowers' debt currently totals around 35 percent of GDP, Boman said.

Abu Dhabi sovereign wealth fund Mubadala issued a $1.5 billion bond earlier this year and the borrower was planning no more issues in 2011, Mubadala's head of capital markets Ali Najafbagy told the conference.

"In 2012, we'll see...we would like to be in the markets at least once a year," he added.