UAE sets debt limit as it readies for sovereign bond

"According to the public debt draft law, value of the public debt should not be more than 45 percent of the GDP or Dh300 billion, whatever less of both at the time of issuing the public debt bonds," the WAM news agency said late on Wednesday, citing the bill approved by Federal National Council.

Public debt of individual emirates should not exceed 15 per cent of their GDP, the state-run agency said, citing the bill.

The UAE plans to issue its debut sovereign bond to fund infrastructure and other costs, following issues by Abu Dhabi and Dubai, Younis al-Khoori, the director general at the ministry of finance told Reuters on Sunday. Information has not been released on the expected size of the issue or the maturity.

The UAE is a federation of seven emirates including Abu Dhabi, the main oil producer in the Opec country, and regional trade and tourism hub Dubai.

The Federal National Council advises the government on legislation and questions cabinet ministers on issues in a parliament-like tradition in the UAE, which does not allow political parties or full popular representation.

Abu Dhabi raised $3 billion in late March as part of a $10 billion bond programme planned over the next two years for general government spending.

Dubai sold $10 billion of bonds to the UAE central bank in February and is planning to raise another $10 billion to support state-linked companies struggling to weather the financial crisis and a real estate slump.

The ministry of finance will handle the debut bond issue on behalf of the federal government and plans to appoint an advisor and seek a sovereign rating, al-Khoori said.

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