Two of the seven UAE emirates are lining up Euro/Dollar bonds. The Emirate of Abu Dhabi wealth fund Mubadala is planning a dual tranche offering denominated in euros through its Mamoura Diversified Global Holding and the Emirate of Sharjah is looking at an issuance of 12Y and 30Y dollar bonds. Despite the slowdown in the bond markets due to the increasing yields, both the issues are likely to see a good investor demand. Sergey Dergachev, a senior portfolio manager for emerging markets at Union Investment commented that “Lower-rated sovereign and corporate credits tend to outperform due to their lower sensitivity to Treasury rates, which should support the Sharjah deal… Meanwhile, Mubadala’s sale will draw investors looking to pick up “quasi-Abu Dhabi sovereign risk,”. Fitch rates UAE at AA-.
While The Government of Abu Dhabi is strongly placed in the investment grade with ratings of Aa2 by Moody’s and AA by Fitch & S&P, the Emirate of Sharjah just makes it to the investment grade after it was downgraded by Moody’s to Baa3 last month and to BBB- by S&P in Oct last year. Emirates of Sharjah’s 4% 2050s were up 0.09 at 92.75 and Emirates of Abu Dhabi’s 3.875% 2050s and 1.7% 2031s were up 0.09 and 0.21 respectively to trade at 111.46 and 96.25 on the secondary markets.
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