Abu Dhabi looks at raising US$10bil from bonds

DUBAI: Abu Dhabi, home to about 6% of the world’s oil reserves, is said to be considering raising about US$10bil from a dollar bond sale as early yesterday to help plug a budget deficit.

Encouraged by Saudi Arabia’s US$12.5bil sale last week, the biggest sovereign deal in emerging markets this year, Abu Dhabi opened books on Monday for a three-part offering ranging from five to 30 years, people familiar with the matter said, declining not to be identified because the talks are private.

No final decision has been made on the size of the transaction, which would be subject to order books, they said.

Gulf Cooperation Council states, which includes the biggest Arab economy of Saudi Arabia, are selling debt as regional governments seek to bridge budget deficits brought on by low oil prices.

Abu Dhabi, whose debt carries the third-highest investment grade at S&P Global Ratings, raised US$5bil in April 2016, its first bond sale in seven years.

The debt offering this week spurred a ninebasis-point increase in the yield on Abu Dhabi’s existing dollar bonds due 2021, the most since November, to 2.27% as of 4:09pm in Dubai yesterday.

The capital of the United Arab Emirates mandated Bank of America Merrill Lynch, Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Holdings Plc, and JPMorgan Chase & Co as joint lead managers and bookrunners to organise the calls.

An external representative for Abu Dhabi’s finance department didn’t immediately respond to a request for comment. — Bloomberg