Abu Dhabi returns to bond market with 3-part dollar issue

Abu Dhabi began marketing on Tuesday a US dollar-denominated bond, in its third foray into the international debt markets this year as the oil-rich emirate props up its finances following a fall in crude prices.

The sale is split into tranches of three, 10 and a half and 50 years, all of benchmark size, which generally means at least $500 million each, a document issued by one of the banks leading the deal showed.

The first tranche due in 2023 offers investors an initial price of around 95 basis points (bps) over US Treasuries and the second tranche due in March 2031 offers around 135 basis points (bps) over the same benchmark.

The longest tranche, maturing in 2070, offers around 3 per cent.

Abu Dhabi was in talks with banks for a new bond issuance last week.

It has already raised $10 billion this year through an initial $7 billion bond in April, which was re-opened the following month.

Despite being rated AA by Fitch and S&P and Aa2 by Moody’s - making it overall the Gulf’s highest-rated sovereign issuer - Abu Dhabi offers higher yields than most of its peers outside the region.

“The reason they’re wider than similarly-rated credits from outside of the Gulf Cooperation Council (GCC) is largely due to supply risk given they are becoming a more frequent issuer,” said Richard Briggs, investment manager at GAM.

But he said the emirate was seen as the strongest oil sovereign credit globally, and its net sovereign debt was still “very negative” given high foreign assets.

Citi, Deutsche Bank, First Abu Dhabi Bank, Morgan Stanley, and Standard Chartered have been hired to arrange the deal, which should close later, the document showed.

Positivity continued to be felt on Monday in the country’s two main bourses, earning the trading companies around Dhs8.6 billion in market cap, driven by the top bank and realty stocks amid aggregate liquidity of Dhs880 million through the flows of foreign and local companies.

In the capital, the main index closed 0.59 per cent higher than the last trading session at 4,569 points. Dubai Financial Market likewise remarkably grew 2.03 per cent crossing the 3000 mark.

In more detail, FAB closed at Dhs11.50, and ADCB at Dhs5.87. Adnic jumped to Dhs4.00 for the first time in a long time.

In the DFM, Emirates NDP witnessed intensive trades worth around Dhs144 million, sending it high to Dhs11.30.

Emaar continued its upward streak to Dhs2.96 and Union Properties to 32 fils followed by Deyaar Development, 31 fils.

A total of 10,517 deals worth Dhs880 million were conducted over 570 million shares.

The total assets of the 18 listed national banks in the UAE rose to around Dhs3 trillion in H1, 2020, up 8.2 per cent, compared to the comparable period of 2019, reflecting the strong financial profile boasted by the Emirati banks, according to data released on their websites.

The sector’s activity is highlighted by the profitability of the banks, as deposits increased around 13 per cent to around Dhs1.942 trillion during the first half of the year, from around Dhs1.72 trillion in the same period last year.

Loans also witnessed growth, climbing 8 per cent from Dhs1.509 billion to Dhs1.629 billion during the reference period.

In more detail, the total assets of 11 ADX-listed national banks amounted to Dhs1.643 trillion against Dhs1.575 trillion. In DFM, seven listed banks saw their total assets increasing from Dhs1.069 trillion to Dhs1.347 trillion.

FAB is the best performer with asset worth Dhs866 billion, accounting for 28.8 per cent of the total assets of all listed national lenders. Emirates NBD comes second with Dhs694.3 billion, or 23.1 per cent, followed by ADCB, Dhs406 billion, Dubai Islamic Bank, Dhs295 billion, and Abu Dhabi Islamic Bank, Dhs124 billion.

Meanwhile the total assets of the 18 listed national banks in the UAE rose to around Dhs3 trillion ($816 billion) in H1-2020, up 8.2 per cent, compared to the comparable period of 2019, reflecting the strong financial profile boasted by the Emirati banks.

The sector’s activity is highlighted by the profitability of the banks, as deposits increased around 13 per cent to around Dhs1.942 trillion during the first half of the year, from around Dhs1.72 trillion in the same period last year.

WAM/Agencies