Abu Dhabi expected to raise $2 bln in its first bond deal of 2021: Bank document

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Abu Dhabi is expected to sell $2 billion in seven-year US dollar-denominated bonds on Tuesday and has tightened the price guidance by 20 basis points after it received over $6 billion in orders, a document showed.

Guidance was revised to 50-55 bps over US Treasuries from 70-75 bps over Treasuries earlier in the day, according to the document from one of the banks on the deal, which is expected to launch later in the day.

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Brent crude, trading at over $68 on Tuesday, has more than tripled since oil’s crash last year, when Brent fell below $20 a barrel.

Abu Dhabi is expected to post a budget deficit of around 43 billion dirhams ($11.7 billion) in 2021 against 37.2 billion dirhams last year, the preliminary prospectus for the new bond offering, reviewed by Reuters, showed.

The budget, however, is based on an oil price assumption of about $46 per barrel versus roughly $50 per barrel last year.

“This deficit is expected to be funded principally by borrowings,” the prospectus said.

Abu Dhabi has become a relatively frequent issuer of US dollar-denominated debt in recent years, and tapped the market three times last year for a total of $15 billion.

At the end of 2020, it had $40 billion in outstanding bonds and $3.9 billion in outstanding loans. Outstanding bonds and loans totaled $29.4 billion at the end of 2019, the prospectus showed.

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