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Sun 19 Apr 2020 05:52 PM

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Abu Dhabi's $7bn bond offering draws strong investor interest

Offering was more than 6.3 times oversubscribed and order book reached in excess of $45bn

Abu Dhabi's $7bn bond offering draws strong investor interest

A $7 billion multi-tranche international bond offering by Abu Dhabi was more than 6.3 times oversubscribed, marking a new record for the emirate.

Abu Dhabi Department of Finance has revealed orders came in from over 100 new accounts and the order book reached in excess of $45bn, despite the economic slowdown caused by low oil prices and the coronavirus pandemic.

Jassim Mohammed Buatabh Al Zaabi, chairman of the Abu Dhabi Department of Finance, said: "The success of the issuance, particularly amidst the global uncertainties caused by the Covid-19 pandemic and the oil price decline, is testament to the continued confidence placed in our aptitude to generate sustainable economic growth.

“Our robust credit fundamentals and strong credit ratings with stable outlooks have enabled us to attract remarkable demand from a diverse pool of investors from the international debt capital markets."

The transaction comprised of three tranches: a $2bn 5-year tranche, a $2bn 10-year tranche, and a $3bn 30-year tranche. International investors accounted for 98 percent of the 30-year bonds.

The tranches were priced at 220 basis points over US Treasuries for 5-year bonds, 240 basis points over the same benchmark for 10-year bonds, and 271.1 basis points over US Treasuries for 30-year notes.

Al Zaabi added: "The debt profile of Abu Dhabi continues to be prudent, underscored by low direct government debt. As a result, we have substantial fiscal flexibility and the capacity to add debt. On that basis, we seized the opportunity to capitalise on the current available market window. Our debt management strategy is a vital component of Abu Dhabi’s economic development and supports the Abu Dhabi Economic Vision 2030."

Abu Dhabi is the only AA rated economy in the region.

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