Abu Dhabi remains focused on sustaining the expansion of its non-oil economy and the emirate will emerge stronger from the Covid-19-driven economic uncertainty, the chairman of the Abu Dhabi Department of Finance said.

“Historically and repeatedly, Abu Dhabi has weathered such global macroeconomic headwinds whilst remaining resilient and positioned for growth,” Jassem Al Zaabi told The National on Wednesday. “I stand firm in my belief that the Abu Dhabi economy will emerge from this period of uncertainty in a stronger position.”

Abu Dhabi is diversifying its funding base as it looks to support sustainable economic growth, he added.

“Despite global economic challenges, I remain confident in our proactive policy-making and fiscal prudence, which will further the sustainable growth of the emirate,” Mr Al Zaabi said.

On Wednesday, the Department of Finance said Abu Dhabi raised $5 billion (Dh18.35bn) from a multi-tranche bond offering. The bond was 4.8-times oversubscribed, with the order book for the deal reaching $24bn. Some 60 new investors vied for subscriptions, allowing for the issue to achieve the lowest ever pricing by a GCC sovereign, with the $2bn three-year tranche priced below 1 per cent. The offering also included a $1.5bn 10-year tranche and a $1.5bn 50-year tranche, which is the longest term ever issued by a GCC sovereign.

It is the emirate’s second foray into the international debt market this year. In April, the emirate raised $7bn from the market through a bond offering that was more than six times oversubscribed, with 90 per cent of orders coming from outside the Middle East.

“We have the flexibility to act swiftly when a window of opportunity arises. We saw an opportunity to capitalise on favourable funding conditions and the outcome is incredibly positive,” Mr Al Zaabi said.

“Unprecedented pricing” demonstrates the “strong demand for Abu Dhabi bonds”, he said without giving the pricing details.

The “proactive and rigorous debt management strategy” is a crucial element of Abu Dhabi’s fiscal sustainability and optimisation of the emirate’s balance sheet remains a core focus, Mr Al Zaabi added.

Governments and central banks across the globe have pumped more than $11 trillion to support their economies and have cut interest rates to near zero since the onset of the pandemic.

Corporates, financial institutions and sovereigns borrowers are all raising funds to take advantage of historically low interest rates as they shore up capital, buffeted by macroeconomic headwinds.

The global economy is facing its deepest recession since the Great Depression as the Covid-19 pandemic continues to spread across much of Asia, Europe and the Americas. Globally, the number infections has risen to 25.9 million with more than 860,000 fatalities and 18.2 million recoveries, according to the Worldometer data.

The International Monetary Fund projects global output will shrink 4.6 per cent this year with a sluggish recovery expected in 2021.

To mitigate the impact of the outbreak on its economy, the UAE was the first in the Middle East and North Africa to roll out Dh282bn in fiscal and monetary support, including zero interest funding to banks to boost lending in the country. The government also launched a variety of other initiatives that range from discounted utility bills to waivers of fees.

Abu Dhabi, which is home to about 6 per cent of the world’s proven oil reserves, has separately rolled out several measures to support start-ups, micro and small and medium-sized businesses. The emirate has enough assets to “safeguard economic growth in the long-run”, Mr Alzaabi told The National in April.

Originally published on The National on 02.09.2020

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