UAE banks to repay crisis cash as value falls

Banks in the United Arab Emirates will this year aim to repay capital placed with them at the height of the global financial crisis, with some turning to the bond market to avoid servicing expensive debt and risking a sudden "capital cliff" later on.

For example, National Bank of Abu Dhabi, the UAE's largest lender by market value, has a $750 million bond maturing in March 2017 that was trading Tuesday at a yield of 2.36 percent – less than half the price it will pay this year on the 3 billion dirhams of government bonds it still has outstanding.

"If you look at how much banks are paying on the bonds compared to where their senior debt is trading, it is a significant difference," said Timucin Engin, associate director for financial services ratings at Standard & Poor's. 

And the price for banks will continue to rise; they are due to pay 5 percent on the bonds this year and 5.25 percent in the final three years to maturity, having paid 4.5 percent in 2012 and 4.0 percent for the first two years of the bonds.

Source : The Daily Star
Read more: http://www.dailystar.com.lb/Business/Middle-East/2013/Feb-06/205207-uae-banks-to-repay-crisis-cash-as-value-falls.ashx#ixzz2K9SouKaf