The UAE begins marketing the first federal dollar bond this week


The UAE government plans to market its first dollar-denominated federal bond as soon as this week, according to four well-informed sources said yesterday.
The UAE government has never issued bonds before, but some of its seven emirates have taken this step, including the capital Abu Dhabi and the financial center Dubai.
Two of the sources said the banks, which are advising the government on the bond issue, included Citi, HSBC, First Abu Dhabi, JP Morgan, Standard Chartered and Bank of America Securities.
According to “Reuters”, two sources said they expected the issuance to be in the billions of dollars, a record issuance, and the government issued a law in 2018 allowing the federal government to issue bonds.
On Thursday, Moody’s credit rating agency classified the UAE at Aa2, in line with its rating of Abu Dhabi, for its global medium-term bond program, which it said may do several currencies, and have different maturities.
It is also widely expected that the UAE will use the program to issue bonds denominated in dirhams, a goal the authorities have long sought to support the country’s financial markets.
In January, Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and prime minister of the UAE, said the government had approved a debt strategy aimed at developing the market for local currency-denominated bond issuance, and other Gulf countries already had active local-currency bond markets.
In addition, the Central Bank of the Emirates issued new directives on combating money laundering and terrorist financing for licensed financial institutions that provide their services to “cash-intensive businesses.”
The bank said in a statement that under the new guidelines, “authorized financial institutions must demonstrate compliance with the requirements of the Central Bank within one month of the entry into force of these guidelines, which started from September 28, 2021.”
He added that this “will contribute to increasing the awareness of licensed financial institutions and broadening their awareness and knowledge of the requirements for effectively implementing legal obligations related to combating money laundering and combating terrorist financing.”
The new guidelines define cash-intensive businesses as “businesses of companies that receive large-scale cash flows within various industrial sectors such as retail and wholesale, travel and transportation.”
In some aspects, they may be acts of entrapment of money carriers, cash deposits, currency exchange and cross-border movement of cash, in money laundering activities or financing terrorism and financing illegal organizations.
“These new guidelines confirm our commitment to applying the highest regulatory standards to licensed financial institutions and their dealings with cash-intensive businesses,” said Bank Governor Khaled Muhammad Balami.
He added that it also comes, “to complement the UAE’s path to actively participate in international efforts to counter money laundering and combat the financing of terrorism, we will continue our efforts to issue similar regulatory guidelines to ensure enhancing the efficiency and robustness of the banking and financial system in the country and in line with the standards of the Financial Action Task Force.”
The Central Bank of the Emirates said that the guidelines “obligate licensed financial institutions, which provide their services to businesses that use cash heavily, to adopt a risk-based approach in their anti-money laundering programs, by evaluating all clients of these companies to determine the degree of risks associated with them.”
“They must also take appropriate customer due diligence measures, which include identifying customers and beneficial owners, understanding the nature of their business, and continuous monitoring of the business relationship,” he added in a statement.


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