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UAE 'may issue federal bonds by 2018', says ministry

August 1, 2014



THE UAE is expected to issue its first ever federal government bonds before 2018 to help the country's banks meet global liquidity rules, but feasibility studies are yet to be completed, a senior finance ministry official said.UAE banks such as National Bank of Abu Dhabi (NBAD) and Emirates NBD could buy the dirham-denominated government debt to help meet liquidity requirements being phased in under Basel III global banking standards.

"The purpose of issuing bonds is to meet the requirements of Basel III, since the central bank needs to accommodate Basel's requests that the country's banks maintain certain portions of sovereign bonds, in which case the unavailability of bonds will make the requirement difficult to fulfil," Younis al Khouri, undersecretary at the federal finance ministry, said.

A long-awaited public debt law, which would be required for any future issuance of federal sovereign bonds, has been stuck in a government consultative process for the past five years. The slow progress has led to repeated calls by the central bank to the government to expedite the law so that domestic lenders can meet forthcoming Basel III liquidity rules, describing it as "a national priority".

Khouri said the ministry was working with the central bank to establish the level of future issuance that would be sustainable.

"It is difficult to determine the date of government bond issuance as studies have not been finalised," Khouri said on the ministry's website.

"It is expected to take place before 2018, because the Basel panel set 2018 as the year to begin implementing the Basel III standards, but there is no comprehensive and final agreement regarding this issue yet," he added.


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Source: Gulf, The (Bahrain)


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