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Tue 11 Jan 2011 01:36 PM

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UAE expects to issue bonds at end-2011, early 2012

Bonds to be first ever at UAE federal level; minister hopes for public debt law approval this year

UAE expects to issue bonds at end-2011, early 2012
BOND ISSUE: Dubais government plans to issue up to $1bn in bonds with a tenor of up to 7 years. (Getty Images)

The UAE

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

debt market.

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.

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