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Abu Dhabi’s first eurobond sale in three years was 4x oversubscribed: Abu Dhabi has sold USD 5 bn eurobonds — its first eurobond issuance in three years — in a sale hailed as “one of the biggest from emerging markets this year,” Bloomberg reports. The offering was more than 4x oversubscribed, with investors reportedly submitting bids worth USD 22 bn, Al Arabiya reports
About the issuance: The issuance comprised three tranches with 5-, 10- and 30- tenors. The emirate narrowed the USD-denominated issuance thanks to strong investor demand from an earlier spread of 70 basis points (bps) over US treasuries, pricing the five-year tranche at 35 bps and the 10-year tranche at 45 bps over treasuries, while tightening the 30-year tranche to 90 bps over treasuries, down from 125 bps.
Background: Abu Dhabi has been eyeing a fresh eurobond issuance for some months, Bloomberg reported in February, joining a wave of debt issuances from emerging economies and looking to boost liquidity.
Abu Dhabi “doesn’t need the money,” senior portfolio manager at Arqaam Capital Mehdi Popotte told Bloomberg, however the eurobond sale will allow the emirate to bolster its presence in the debt market, “[paving] the way for Abu Dhabi’s government-related entities to issue further later this year,” Popotte added.
REMEMBER- S&P Global Ratings expected the emirate to issue around USD 2 bn in new debt annually until 2026 in order to “maintain a presence in the market,” in addition to repaying an average of USD 3 bn per year.
Advisers: The bond sale was managed by our friends at HSBC Holdings and First Abu Dhabi Bank, as well as Abu Dhabi Commercial Bank, Citigroup, JPMorgan Chase & Co, Morgan Stanley, and Standard Chartered.
