Abu Dhabi has raised USD 3 bn from its debut dual-tranche bond of the year, Bloomberg reports, with a person familiar with the matter saying the issuance comprised five- and ten-year tranches. The five-year notes were priced at a yield of 0.2% above US Treasuries, while the ten-year tranche was priced at 0.25% above US Treasuries, both down about 30 basis points from initial price thoughts.

Demand was strong: The order book peaked at more than USD 12.7 bn, the business news information service reports. “The initial yield was not too tight and not too big of a spread, which should be positive for yield hunters,” economist Hamzeh Al Gaood tells EnterpriseAM.

The move comes only a few days after JPMorgan said it plans to remove the UAE from its emerging market bond index, and Al Gaood says the move is well-timed to capitalize on the index before its removal and before it is poised to compete with developed market spreads. The UAE’s removal will take place in four stages starting 31 March, with full exit slated for June.

The structure: The senior unsecured bonds will be issued under the emirate’s global medium-term note (GMTN) program, with a dual listing slated for the London Stock Exchange and ADX. The issuances are expected to be rated AA by S&P Global and Fitch Ratings.
Track record: Abu Dhabi last tapped international debt markets in September with its first dual-tranche issuance since April 2024 under the same GMTN program, raising another USD 3 bn.

ADVISORS- BNP Paribas, Emirates NBD Capital, First Abu Dhabi Bank, Goldman Sachs International, JPMorgan, and Standard Chartered Bank are joint global coordinators.
The fiscal backdrop: Abu Dhabi’s government debt stood at just 17.4% of GDP at the end of 2024 — well below the 48.8% peer median. Fitch Ratings expects this to tick up slightly to about 18.2% by the end of 2026, “despite budget surpluses as the government issues in local currency to support the domestic debt market due to high local bank liquidity.”

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