UAE in market with two-tranche bonds -document

BY Reuters | TREASURY | 06/23/22 01:52 AM EDT

DUBAI, June 23 (Reuters) - 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, the document from one of the banks on the deal showed.

Abu Dhabi Commercial Bank, BofA Securities , Citi, Emirates NBD Capital, First Abu Dhabi Bank, HSBC (HSBC), JPMorgan (JPM), Mashreq and Standard Chartered (SCBFF) are joint lead managers and bookrunners on the 10-year tranche, with ICBC as co-manager.

Citi, HSBC (HSBC), JPMorgan (JPM) and Standard Chartered (SCBFF) 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, and the deal is expected to price later on Thursday. (Reporting by Yousef Saba; Editing by Clarence Fernandez)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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