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Abu Dhabi sells first 30-year bond

Abu Dhabi sells first 30-year bond

DUBAI: Abu Dhabi sold its first ever 30-year sovereign bond on Tuesday as part of a $10 billion triple-tranche debt issue that drew heavy demand.

The sale followed a $12.5bn bond issue by Saudi Arabia last week the largest emerging market bond sale in 2017 — and was the latest jumbo sovereign offering from Gulf states tapping the debt markets in a period of low oil prices.

Abu Dhabi has long been seen as the safest credit among Gulf Cooperation Council sovereigns and its issue on Tuesday, of five, 10 and 30 year maturities, had attracted more than $30bn in demand, a document issued by one of the banks leading the deal showed.

Extending its bond curve to 30 years, Abu Dhabi joins the other Gulf states which — with the exception of Kuwait — have all issued debt with a 30-year tenor over the past two years, aiming to deepen their yield curves and tap into global demand from investors seeking high yields in a low rate environment.




Initial pricing guidance for the three-tranche Abu Dhabi issue was considered “generous” by investors when compared to existing Abu Dhabi bonds maturing in 2021 and 2026, issued last year. But strong demand for the paper allowed the lead banks to tighten price guidance by 20 basis points across the three tranches.

The emirate launched its new bonds with a new issue premium estimated at roughly 10 basis points over the existing 2021 bonds, and 15 basis points over the existing 2026 bonds, according to Richard Briggs, a credit strategist at research firm CreditSights.

Published in Dawn, October 4th, 2017

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