The United Arab Emirates (UAE) successfully raised $1.5 billion through a bond sale on Tuesday, marking its first venture into international debt markets in over a year. The 10-year security was priced at 60 basis points above similar maturity Treasuries, with the order book exceeding $6.8 billion.
This bond sale is part of the UAE's broader financial strategy to strengthen its position as a global hub for business and finance, amidst increased regional competition, particularly from Saudi Arabia.
In June 2022, the UAE, a federation of seven emirates including the oil-rich Abu Dhabi and commercial hotspot Dubai, raised $3 billion from another bond sale, following its inaugural bond issue in 2021.
These sales are expected to contribute to the country's ambitious economic growth targets. The UAE aims to double its gross domestic product (GDP) to over $800 billion by the end of this decade. In 2022, the nation's economy grew nearly 8%, supported by high crude prices and production levels. However, the International Monetary Fund anticipates that GDP growth will decelerate to 3.5% this year.
The UAE's debt holds strong ratings from major credit rating agencies. Moody's (NYSE:MCO) Investors Service rates it Aa2, which is the third-highest investment grade, while Fitch Ratings assigns it one step lower at AA-.
The recent debt deal was managed by a consortium of leading banks including Abu Dhabi Commercial Bank, BNP Paribas (OTC:BNPQY) SA, Citigroup Inc (NYSE:C)., Emirates NBD Capital, First Abu Dhabi Bank, Goldman Sachs Group Inc (NYSE:GS)., HSBC Holdings Plc (LON:HSBA), Mashreq and Mizuho Financial Group Inc.
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