ABU DHABI: The United Arab Emirates (UAE) sold its first Eurobonds since September, offering investors 10-year dollar debt.
The country priced US$1.5bil with a spread 60 basis points above the US Treasury curve, after demand exceeded US$5.75bil, according to a person familiar with the matter.
The oil-rich UAE has one of the highest credit ratings of any sovereign. It’s rated Aa2 by Moody’s Investors Service, the same as the UK and South Korea.
This will be only the country’s fourth eurobond as a federal entity. However, Abu Dhabi, the capital, sold US$5bil of debt in April.
The 10-year portion of that deal was priced with a yield of 5.04% and a spread of 45 basis points over comparable US Treasuries. It currently trades around 4.8%.
The UAE government has enjoyed a boom in the past few years thanks to high oil and natural-gas revenues.
It’s one of the world’s richest countries and among just a few to manage over US$1 trillion in sovereign-wealth funds.
While it doesn’t need to raise money from the bond market, the new deal could be aimed at improving liquidity in the debt curve, according to Zeina Rizk, co-head of fixed income at Amwal Capital Partners in Dubai.
Investors are often more likely to trade a country’s bonds if it has plenty of maturities outstanding.
“It might just be to remain in the market, to keep the curve liquid,” Rizk said. “There’s a lot of technical demand.”
Gulf nations have been particularly active in the international bond market this year, taking advantage of high demand. — Bloomberg
