The United Arab Emirates is expected to issue its first local currency bonds this year, ratings agency Moody’s said.
While individual emirates -- most notably Abu Dhabi and Dubai -- have issued government debt, the UAE has no debt of its own.
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“Moody’s expects that the federal government will launch an inaugural local currency issuance this year,” said the agency in a report that affirmed the country’s ‘Aa2’ credit rating.
“Since the primary purpose of the bonds will be to establish a domestic yield curve, the higher debt burden will be accompanied by further accumulation of liquid assets, and is unlikely to significantly affect the fiscal strength of the federal government,” it said.
Moody’s expects the size of the debut issuance to be “modest”, adding less than a percentage point to the UAE’s consolidated government debt this year.
The UAE cabinet in January approved a public debt strategy aimed at developing the Gulf state’s market for local currency bonds and officials have said last year an issuance was imminent.
The affirmation of the rating reflected the view that oil-rich Abu Dhabi -- the wealthiest among the seven UAE emirates -- would provide financial support to the country if needed.
Abu Dhabi’s ‘Aa2’ rating was also affirmed, Moody’s said in a separate report this week, citing strong government finances.
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