Abu Dhabi offers more bonds to stockpile cash

The fall in oil prices has put a strain on the finances of Middle Eastern energy-producing countries

Abu Dhabi City United Arab Emirates

Abu Dhabi is seeking to raise more money from international debt markets just weeks after a $7bn bond sale as countries bolster their finances in the face of the coronavirus pandemic.

The emirate is marketing a tap of its three-tranche deal priced in April, according to people familiar with the matter who asked not to be identified because the matter is private. The offering last month carried an attractive yield premium and was met with strong demand, garnering more than $25bn of orders.

The initial price guidance:

  • About 165 basis points over Treasuries for debt due April 2025
  • A spread of roughly 185 basis points for debt due April 2030
  • For the 40-year bond tap at between 3.50 to 3.55 per cent

The fall in oil prices has put a strain on the finances of Middle Eastern energy-producing countries. Saudi Arabia also sold $7bn of bonds last month, while Abu Dhabi’s state fund Mubadala Investment Co. raised $4bn debt last week.

The need for large stimulus around the world has prompted other countries to issue more debt as well.

Indonesia, Spain and Italy are among nations that have recently offered notes, as massive central bank stimulus helps global credit markets rebound from a March rout.

Still, with oil’s recent historic crash below zero looking increasingly like an aberration, there’s some signs of relief for energy-related borrowers. The gradual easing of lockdowns in some economies around the world, together with additional stimulus from governments and central banks, is also buoying investor sentiment, even as many uncertainties remain about the virus and global economy.

BNP Paribas, First Abu Dhabi Bank, JPMorgan Chase & Co. and Standard Chartered are the joint lead managers for the Abu Dhabi sale.