Bonds to be first ever at UAE federal level; minister hopes for public debt law approval this year
finance ministry expects to issue the oil producer's first
sovereign bonds toward the end of the year or in early 2012, a
minister said on Tuesday.
The UAE's top advisory council passed a new public debt law
last month, paving the way for the Gulf Arab country's first
debt issues at the federal level.
Asked when he expected to issue new bonds, Minister of State
for Financial Affairs Obaid Humaid Al Tayer told reporters on
the sidelines of a parliamentary meeting: "Either the end of
this year or the first part of next year."
He did not give details, saying he hoped the public debt
bill would be approved by the UAE president this year.
The legislation, which needs presidential approval to become
law, limits UAE government debt to 25 percent of the country's
gross domestic product, or AED200bn ($54.5bn).
The bill also provides a legal framework for creating a
government bond market in the UAE, made up of seven emirates,
with public debt instruments traded on one or more of the
country's three financial markets.
The UAE has so far seen sovereign bonds issued only by
individual emirates such as Abu Dhabi and Dubai, and analysts
have said federal issues would help revive the local currency
The global credit crunch slammed the brakes on an oil- and
real estate-led boom in the UAE, sending the world's third
largest oil exporter in 2009 into its first economic downturn
since 1993. Debt problems in property-focused Dubai slowed
recovery last year.
Tayer said last month the country will look at a range of
options, including using existing reserves or returns from
government investments to finance a budget deficit of around AED3bn ($816.8m) for 2011 and issue bonds only
when necessary to cover the gap.