UAE Fed­eral Bank to sell bond af­ter pas­sage of debt law

Mint ST - - DEALS - Zainab Fat­tah & Yousef Ga­mal El-din DUBAI

Afed­eral lender in the United Arab Emi­rates (UAE) will be the first to uti­lize the coun­try’s newly ef­fec­tive debt law by sell­ing its first bond later this month, ac­cord­ing to a se­nior gov­ern­ment of­fi­cial.

Emi­rates Devel­op­ment Bank, a state-owned in­sti­tu­tion that pro­vides fi­nanc­ing to cit­i­zens and small and medium-sized en­ter­prises (SMES), plans a $750 mil­lion bond sale in Fe­bru­ary, its first debt is­suance since the in­sti­tu­tion started op­er­at­ing in 2015, You­nis Al Khoori, un­der­sec­re­tary at the UAE Min­istry of Fi­nance, said Sat­ur­day in a Bloomberg TV in­ter­view from Dubai.

Pro­ceeds will be passed on to the UAE econ­omy through loans to SMES and other en­ti­ties, as well as for hous­ing, pro­vid­ing cost sav­ings, Al Khoori said.

“We are aim­ing for a cer­tain yield and hope­fully the mar­ket will not change much over the com­ing few weeks,” he said.

The UAE passed a law in Oc­to­ber al­low­ing the fed­eral gov­ern­ment to is­sue sovereign debt for the first time, en­abling its seven emi­rates to ben­e­fit from a higher credit rat­ing and lower bor­row­ing costs.

Larger sheikhdoms in the fed­er­a­tion, such as Dubai and Abu Dhabi, al­ready sold bonds, but the new law gives its less wealthy emi­rates ac­cess to debt at lower in­ter­est rates.

The Emi­rates Devel­op­ment Bank can sell as much as $5 bil­lion in bonds un­der its es­tab­lish­ment man­date ap­proved by the coun­cil of min­is­ters, Al Khoori said.

The fi­nance min­istry doesn’t in­tend to is­sue any pub­lic debt cur­rently be­cause the 2020-21 bud­get cy­cle has al­ready been ap­proved, the un­der­sec­re­tary said. The min­istry will work with the prime min­is­ter’s of­fice to de­ter­mine any debt­sale needs for the fol­low­ing bud­get, the min­is­ter said. The min­istry is also work­ing closely with the UAE cen­tral bank to come up with clear poli­cies for is­su­ing debt in­stru­ments to man­age liq­uid­ity as part of Basel 3 re­quire­ments un­der the new law, Al Khoori said. feed­[email protected]

BLOOMBERG

UAE passed a law in Oc­to­ber al­low­ing the fed­eral gov­ern­ment to is­sue sovereign debt for the first time

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