Unprecedented interest in Abu Dhabi dual-tranche bonds reported

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The Emirate of Abu Dhabi issued a US Dollar 5 billion dual-tranche bond

· USD 2.5 billion 2.218 yield due 2021, and USD 2.5 billion 3.154 yield due 2026
· Abu Dhabi Emirate’s bonds are priced at a spread of 85bps and 125bps over U.S. Treasuries respectively
· Over 600 of combined orders exceeded 17 Billion USD with a coverage percentage more than 340 per cent
· Significantly oversubscribed, with strong demand from both international and regional investors

The Emirate of Abu Dhabi announced that it has successfully issued its benchmark dual-tranche 5- and 10-year, USD 5bn bond. Notes due 2021 (the 5-year Bonds) and for the value of USD 2,500,000,000 and notes due 2026 (the 10-year Bonds) for the value of USD 2,500,000,000. The 5-year Bonds was priced on 25th April 2016 at a yield of 2.218%; the 10-year Bonds with a yield of 3.154% with a spread of 85bps and 125bps respectively, over the relevant US Treasury securities.

The bonds were significantly oversubscribed with an aggregate of over 600 orders, exceeding USD 17 Billion, with strong demand from both international and regional accounts. Commenting on the issuance, HE Riyad Al Mubarak, Chairman of the Department of Finance Abu Dhabi, said: “We received positive feedback from investors during this process, which serves as a testament to the Emirate’s solid credit standing and the high trust it enjoys in the global market. Abu Dhabi’s wise leadership strategy, diversification efforts, successful management of Sovereign Wealth Funds, and great strides it has achieved in education, health and infrastructure , have set it as a role model for the region and the world.”

He added: “The Emirate has adopted a prudent, model for comprehensive development over the course of more than five decades, by adopting balanced fiscal policy and building a solid budget for the public sector and maintaining moderate level of public debt, which has led to strong credit profile and large fiscal buffers, resulted in boosting the economic growth and stability of the Abu Dhabi Emirate in particular and UAE in general.

The final geographic allocation for the 10-year Bonds was 62% foreign investors (6% to Asian investors, 13% to European investors, 17% to UK investors, 26% to US investors) and 38% to investors from the Middle East. The allocation for the 5-year Bonds was 53% foreign investors (15% to Asian investors, 18% to European investors, 8% to UK investors, 12% to US investors) and 47% to investors from the Middle East.

The final investor types allocation for the 10-year Bonds was 44% to banks and private banks, 46% to fund managers and 10% to agencies, pensions and insurance. The final investor types allocation for the 5-year Bonds was 65% to banks and private banks, 24% to fund managers and 11% to agencies, pensions and insurance.

Bank of America Merrill Lynch, Citigroup and JP Morgan were Joint Lead Managers and Joint Bookrunners. Abu Dhabi Commercial Bank, National Bank of Abu Dhabi and First Gulf Bank were co-managers of the issue.

Joint Lead Manager quotes:”This transaction was an important exercise in establishing a new sovereign benchmark in the region upon which others will follow. The Emirate of Abu Dhabi deftly managed to establish a tight pricing benchmark whilst ensuring strong geographic diversification,” commented Hakim Karoui, Co-Head of Middle East & North Africa Corporate and Investment Banking at Bank of America Merrill Lynch.

“The transaction was met by very strong response from investors globally. The size and quality of the order book is a testament to the strength of the Abu Dhabi credit”, said Iman Abdelkhalek, head of Citi’s MENA Debt Capital Markets.

“The unmitigated success of this transaction validates the achievements and strategy of Abu Dhabi’s leadership, creating a resilient and striving economy throughout economic cycles,” said Hani Deaibes, head of J.P. Morgan’s MENA Debt Capital Markets

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