The UAE begins marketing federal bonds

The UAE government is preparing to start marketing its first dollar-denominated federal bond soon, at a time Reuters says may start this week.

The agency quoted its sources as saying that banks will advise the government on the issuance of bonds, led by Citi, HSBC, First Abu Dhabi, JPMorgan and Standard Chartered. and Bank of America Securities.

It added that Abu Dhabi is likely to raise about $3 billion, and the emirate sold $2 billion in seven-year bonds in May, after raising $15 billion in bond issues last year.

The UAE government has never issued bonds before, but some of its seven emirates have taken this step, including the capital Abu Dhabi and the financial center Dubai.

Last May, Moody's credit rating agency expected the UAE to issue its first local currency bonds this year.

Last January, the UAE Cabinet approved a public debt strategy aimed at developing the local bond market.

By the end of June 2021, the value of Abu Dhabi’s outstanding bonds amounted to 39.5 billion, with 3.7 billion loans to local banks, and 2.4 billion secured obligations, while government-owned entities borrowed 59.2 billion dollars, until the end of June of last year.

The Dubai government also began marketing bonds in two tranches, last month, in its first sale in the public debt market in six years; The bond offering prospectus showed that Dubai's budget will record a deficit of $3.2 billion this year.

It also showed that while the government's direct debt amounted to about $34 billion at the end of June, Dubai did not put together an aggregate estimate of the total outstanding debt of government entities.