Abu Dhabi issues $5bn multi-tranche, 50-year bond

Abu Dhabi has issued a $5bn multi-tranche bond on September 2, in a sign of its interminable commitment to fiscal sustainability.

The issuance comprises of three tranches: a $2bn, 3-year tranche; a $1.5bn 10-year tranche; and a $1.5bn 50-year tranche.

The 50-year tranche is the longest term for a bond issued by a GCC sovereign issuer, official news agency WAM reported.

Abu Dhabi remains the only AA-rated sovereign issuer by all three rating agencies in the GCC region. The bond issuance was 4.8 times oversubscribed (at peak order book), with orders coming from over 60 new accounts and an order book which peaked at $24bn.

The 50-year bonds were well received by international investors, who accounted for 95 per cent of the final geographical allocation.

Jassem Mohammed Buatabh Al Zaabi, chairman of the Abu Dhabi Department of Finance, said: “The success of this bond issuance, in the midst of the Covid-19 global crisis, demonstrates the robust credit fundamentals and more broadly the strength of Abu Dhabi’s economy. The 50-year tranche is a first for not just Abu Dhabi but also for the GCC, and a reflection of formidable investor confidence in our economy, credit strength and long-term outlook.”

The proceeds of the bond issuance will allow Abu Dhabi to focus on sustaining pronounced non-hydrocarbon sector expansion as the emirate continues to diversify its sources of funding and optimise the use of government resources to provide sustainable growth.

The tranches achieved a pricing at 0.83 per cent for 3-year bonds, 1.732 per cent for 10-year bonds, and at 2.7 per cent for the 50-year notes.

Citi, Deutsche Bank, First Abu Dhabi Bank, Morgan Stanley, and Standard Chartered were joint lead managers and joint bookrunners.