H.E. Mohamed bin Hadi Al Hussaini rings market-opening bell to celebrate listing the UAE sovereign bonds on Nasdaq Dubai
- Global books to the first-of-its-kind sovereign bonds in the UAE peaked at USD 22.5 billion, representing a 5.6x oversubscription.
- The high demand of investors for the UAE’s sovereign bonds reaffirms the UAE’s strong credit rate and strong and balanced economy.
- The Ministry of Finance issued bonds that achieved the lowest-ever yield for a debut sovereign from the GCC.
- The United Arab Emirates is the first-ever sovereign to do a US dollar benchmark issuance in the 20-year tenor in the GCC.
His Excellency Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, rang the market-opening bell to celebrate and mark listing the UAE sovereign bonds on Nasdaq Dubai. The sovereign bonds package – which is the first of its kind to be issued by the UAE Government – raised USD 4 billion, with the Ministry of Finance representing the UAE government in this issuance.
The bell ringing was attended by H.E. Essa Kazim, Governor of the Dubai International Financial Centre (DIFC) and Chairman of the Dubai Financial Market (DFM); H.E. Younis Haji Al Khoori, Undersecretary of Ministry of Finance; Hamed Ali, CEO of Nasdaq Dubai and Deputy CEO of the DFM; H.E. Saeed Rashid Al Yateem, Assistant Under Secretary of the Resource and Budget Sector at the Ministry of Finance; H.E. Mariam Al Amiri, Undersecretary, Financial Management Sector; and senior officials from both parties.
H.E. Mohamed bin Hadi Al Hussaini said: “The UAE has recorded an unprecedented achievement in issuing these bonds, which came in accordance with the UAE government’s strategy that has firm objectives and directives, and prioritises the prosperity of the UAE people. This issuance coincides with the adoption of the largest budget in the history of the UAE, thereby reaffirming the country’s strong and balanced economy. It also reiterates the confidence of local, regional and international investors in our country’s ability to achieve sustainable economic growth, especially since the proceeds of these bonds will be used to provide financing for infrastructure projects for the federal government in strategic fields. This will help create long-term value for the sovereign wealth of the UAE government, contribute to the UAE’s prosperity in the future, and support the country’s progress towards sustainable economic and social development – which is a key pillar for the next 50 years.”
The U.S. dollar-denominated multi-tranche sovereign bonds are comprised of three tranches: a 10-year tranche, a 20-year tranche, in addition to a 40-year dual-listed Formosa tranche. The bonds captured the demand of international and regional investors. Global books peaked at over USD 22.5 billion, representing a 5.6 per cent oversubscription. This enabled the Ministry of Finance to issue bonds that achieved the lowest-ever yield for a debut sovereign from the GCC, as the returns of the three tranches were priced at 2%, 2.875% and 3.250%, respectively.
From his side, H.E. Essa Kazim, Governor of the Dubai International Financial Centre (DIFC) and Chairman of the DFM, said: “We congratulate the Ministry of Finance for the successful issuance and listing of the debut issuances from the UAE Federal Government. The historic issuances underline the strategic commitment to reinforce the capital markets’ activities in the country, considering its status as an international financial hub by developing a government bond market alongside the already active corporate bond and Sukuk market. They are not only providing investors with highly-rated investment opportunities and strengthening the Government’s credit profile but also represent a key driver for a thriving fixed income market that is vital in financing economic development projects in the UAE and the broader region. The issuances shall give more momentum to UAE’s development efforts as our country is showcasing an excellent example in addressing the global economic challenges and its GDP is poised to grow by 3.1% this year as per the International Monetary Fund (IMF) forecasts.”
His Excellency Younis Haji Al Khoori stated: “The three tranches achieved the lowest-ever yield for a debut sovereign from the GCC, another testament to the credit strengths of the UAE. The United Arab Emirates is the first-ever sovereign to do a US dollar benchmark issuance in the 20-year tenor in the GCC. In addition, the 40-year Formosa tranche achieved the highest ever distribution into Asia for a long-dated US dollar benchmark issuance by a sovereign. The issuance of these bonds will contribute to the development of the bond market and finding investment alternatives for investors.”
Hamed Ali, CEO of Nasdaq Dubai and Deputy CEO of the DFM, said: “As the international exchange of the region, Nasdaq Dubai is pleased to welcome the listing of the UAE federal bonds. This significant step clearly indicates the deep belief in Nasdaq Dubai’s comprehensive infrastructure that has created a world-class marketplace to support issuance and listing of fixed income instruments from sovereign and commercial issuers in the UAE and beyond and enable them to connect with local, regional and international investors. The accelerating pace of issuances and listings on Nasdaq Dubai has reinforced its position as the leading venue for fixed income listings in the Middle East with a total value of US$ 107 billion.”
The below chart shows the geographical allocation of the three-tranches:
The below chart shows the allocation by type for the three-tranches: