UAE sells US$3 billion in high-quality debt amid recession fears

The United Arab Emirates returned to international bond markets following its debut sale last year, taking advantage of demand for high-quality debt amid mounting concern over a global recession.

The oil-rich Persian Gulf nation on Thursday sold US$1.75 billion in 10-year bonds and US$1.25 billion in notes due in 2052, according to a person familiar with the matter who’s not authorised to speak publicly and asked not to be identified.

The 10-year security priced at 100 basis points over Treasuries of similar maturity, while the 30-year so-called Formosa bond – debt issued in Taiwan and denominated in a currency other than the Taiwan dollar – is at a spread of 175 basis points.

Debt issued by the UAE has outperformed developing peers this month as central banks step up efforts to curb inflation, fuelling concerns the global economy may be headed for a recession. The nation’s debt is rated Aa2, the third-highest investment grade, by Moody’s Investors Service, and one step lower at AA- by Fitch Ratings.

The UAE, which comprises seven emirates including oil-rich capital Abu Dhabi and commercial hub Dubai, in October sold the first bond in its half-century history as a combined federation. The sheikhdoms set separate budget policies and several of them have tapped the market over the years.