UAE starts selling first federal government dollar bonds

UAE starts selling first federal government dollar bonds

The United Arab Emirates started marketing a triple-tranche US dollar-denominated bond on Wednesday, the first issued by the federal government rather than individual emirates, in a sale to be concluded the same day, a document showed.

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The bonds have tranches of 10, 20, and 40 years. The 10-year notes were offered with an initial price guidance of about 105 basis points (bps) over US Treasuries, the 20-year at about 135 bps over the same benchmark, and the 40-year at about 3.6 percent.

The 40-year portion will be Formosa bonds, which are debt securities sold in Taiwan by foreign borrowers and denominated in currencies other than the Taiwanese dollar.

The UAE finance ministry is expected to raise between $3 billion and $3.5 billion, two sources familiar with the matter have told Reuters.

The federal government has never issued bonds before but several of the seven emirates that it comprises have, most notably the capital Abu Dhabi and commerce hub Dubai.

“The price thoughts are around 40 bps wider to the extrapolated Abu Dhabi sovereign curve,” a fixed income strategist said.

“They’ll likely land roughly 10 bps wider than Abu Dhabi. Given it’s a debut,