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UAE seeks $2bn in international loans

Image taken by Israeli photographer Michael Miki Spitzer in the United Arab Emirates [Facebook]
Image taken by Israeli photographer Michael Miki Spitzer in the United Arab Emirates [Facebook]

The government of Abu Dhabi is in talks with banks for a $2 billion loan, two sources familiar with the discussions said, a move which would allow the oil-rich emirate to tap new liquidity pools in an era of low oil prices, Reuters reported.

Abu Dhabi, the capital of the United Arab Emirates, sold its latest international bonds in September last year, raising $10 billion for budgetary purposes and garnering almost $20 billion in demand.

It is now working on a “self-arranged loan”, putting together commitments from banks for a potential $2 billion debt facility which, if finalised, would be the government’s first, the two sources familiar with the discussions said.

The Abu Dhabi Department of Finance declined to comment, a spokesman said.

Rated AA by S&P and Fitch and Aa2 by Moody’s, Abu Dhabi has one of the world’s largest sovereign net foreign asset positions and low levels of debt, but its fiscal balance depends almost entirely on revenue from hydrocarbon royalties and taxes and dividends received from ADNOC, its national oil company.

Sources told Reuters earlier this month that the emirate had been in discussions with banks for potential issues in the debt markets this year as part of plans to engage global fixed income investors on a more regular basis.

Discussions with potential bond advisers were put on hold about two weeks ago, said one of the two sources and a third source familiar with the matter.

A fourth source said it would make sense for the emirate to tap different pools of liquidity after its latest $10 billion jumbo bond.

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