NBAD plans debt expansion for Abu Dhabi

Uta Harnischfeger

• Last Updated: November 05. 2009 2:56PM UAE / November 5. 2009 10:56AM GMT

Abu Dhabi’s largest bank by market capitalisation plans to expand its debt market operations as the emirate prepares to spend US$250 billion (Dh918.12bn) on infrastructure projects.

The National Bank of Abu Dhabi (NBAD) hopes to tap rising international appetite for UAE sovereign-related debt as local capital markets experience increasing activity.

“We reckon that Abu Dhabi will spend $250bn on new projects in the next eight years and there is no way this can be financed through the local banking sector,” said Michael Tomalin, the chief executive of NBAD. “The balance sheets of the local banks are just not big enough to sustain that vision. The local banks are small in relation to the needs of the economy.”

At the end of September, the combined assets of all UAE banks stood at Dh1.52 trillion, with NBAD accounting for about 12 per cent of the total.

Thawing global credit markets have sparked new international appetite for UAE debt, including that of Dubai, as international investors return to emerging markets.

Abu Dhabi entities, including the Government, have issued about $9bn in bonds since May. Two weeks ago, the Government of Dubai issued a $6.5bn bond programme.

uharnischfeger@thenational.ae