Banking & Finance UAE eyes dollar bonds to fill $600m 2022 budget deficit By Reuters June 23, 2022 Creative Commons Earlier this week, the UAE raised 1.5 billion dirhams in a local currency treasury bond sale. The first of such sales was in May, raising the same amount. Four similar issues are expected this year Bond sale comprises a 10-year tranche, 30-year Formosa portionInvestor presentation expects 56.7 billion dirham in revenuesUAE raised 1.5 billion dirhams in a local currency treasury bond The United Arab Emirates is in the market with a two-tranche U.S. dollar-denominated bond sale comprising a 10-year tranche and 30-year Formosa portion, a bank document showed on Thursday. Initial price guidance was around 125 basis points (bps) over U.S. Treasuries (UST) for the 10-year paper and around 200 bps over UST for the Formosa notes, according to the document from one of the banks on the deal, expected to price later on Thursday. The debt sale will be used for “budgetary purposes in compliance with the Public Debt Strategy and/or for the purpose of investment by the EIA pursuant to the Public Debt Strategy,” the document said, referring to the UAE’s federal sovereign wealth fund. An investor presentation viewed by Reuters showed the UAE expects 56.7 billion in revenues in its 58.9 billion-dirham budget for 2022, leaving it with a 2.2 billion-dirham deficit to fill. The federal budget accounts for only a fraction of consolidated state spending in the UAE as individual emirates such as Abu Dhabi and Dubai also have their own budgets. Abu Dhabi Commercial Bank, BofA Securities , Citi, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, JPMorgan, Mashreq and Standard Chartered are joint lead managers and bookrunners on the 10-year tranche, with ICBC as co-manager. Citi, HSBC, JPMorgan and Standard Chartered are joint bookrunners on the Formosa portion. ADCB, BofA Securities, Emirates NBD Capital, First Abu Dhabi Bank, ICBC and Mashreq are structuring agents. Each tranche is expected to be of benchmark size, which generally means at least $500 million. Earlier this week, the UAE raised 1.5 billion dirhams in a local currency treasury bond sale. The first of such sales was in May, raising the same amount. Four similar issues are expected this year. Those local currency deals followed the UAE federal government’s debut dollar bond sale in October, which raised $4 billion our of an orderbook of over $22.5 billion in orders.