Widespread praise
The big story of the year in Middle Eastern bond markets was the much anticipated return of sovereign supply from GCC states looking to plug budget holes caused by falling oil revenues. In volume terms, the standout transaction was Qatar’s $9bn triple-tranche trade in late May. However, it was Abu Dhabi’s $5bn bond a month earlier that attracted the most widespread praise from market participants for re-opening the market for bumper bond issues from the region in impressive style.
The deal, which comprised equal sized five and 10 year tranches, was the first from the emirate since April 2009.
Debt management officials helped to boost demand for the bond by coming to market ahead of competing supply but in the wake of several weeks of strong inflows into emerging markets funds. They were rewarded with total orders of more than $17bn, which allowed both tranches to be priced at a minimal premium to Abu Dhabi’s outstanding debt and that of comparable regional sovereigns. The deal’s warm reception helped to smooth the path to issuance for both Qatar and Oman, which made a well received $2.5bn bond market debut in early June. It also successfully reset the yield curve for borrowers from the United Arab Emirates sparking a wave of issuance from local banks and corporates eager to take advantage of surging demand for paper from the jurisdiction.