The UAE led a surge in Arabian Gulf US-denominated international debt issuances during the second quarter, as low oil prices prompted governments to turn to bond markets to plug budget deficits.
The UAE issued $14.4 billion in the second quarter, Qatar $9bn and Oman $5bn, according to a report published yesterday from the Bank for International Settlements.
The Middle East accounted for almost a third of all issuances from emerging markets during the period, the bank said.
“With a lower oil price, more UAE names need to fund themselves externally and are going to the bond market to do so,” said Andy Cairns, global head of debt origination & distribution at National Bank of Abu Dhabi.
“As US interest rates remain historically low, now is a good time to lock in cheap borrowing,” he said.
Mr Cairns said it was likely that debt issuances in the region would increase as long as oil prices remained depressed.
The Bank for International Settlements did not give year-on-year comparative figures, but graphs it provided indicated that it was much higher than the past couple of years.
The emirate of Abu Dhabi has been among the biggest single sellers of international bonds this year from the UAE. In April, it sold $5bn in sovereign bonds for the first time since 2009.
Abu Dhabi’s department of finance sold a $2.5bn tranche of five-year bonds yielding 2.125 per cent which mature on May 3, 2021, and another $2.5bn tranche of 10-year bonds yielding 3.125 per cent that mature on May 3, 2026.
UAE government-related entities are also said to be exploring finance options from international lenders as sources of funding at home become more expensive amid tightening liquidity in banks.
The price of crude has dropped by as much as 70 per cent from its high in the middle of 2014.
mkassem@thenational.ae
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