Abu Dhabi has launched a two-part $5bn bond following investors meetings last week in the UAE, the US and Europe.

The bond was offered at the tight end of price guidance, according to the news agency Reuters, which cited one of the lead managers on the deal.

The emirate launched a $2.5bn five-year bond at 85bp over US treasuries, at the lower end of guided rate of 85bp-90bp, and a $2.5bn 10-year at 125bp over treasuries, compared to guidance of 125bp-130bp.

Bank of America Merrill Lynch, Citigroup and JP Morgan are the lead managers on the deal.

Abu Dhabi, which holds about 6 per cent of the global oil reserves is rated AA by Standard & Poor’s and Fitch.

The emirate expects to post a wider budget deficit of AED36.9bn ($10.1 billion) in 2016, and it plans to plug the gap mainly with international bond issues, it said in the bond prospectus, submitted to London Stock Exchange.

US-based rating agency Moody’s estimates that Abu Dhabi’s fiscal deficit could reach to 14 per cent of its gross domestic product (GDP) in 2016. Moody’s projection was higher compared to the 11.6 per cent deficit predicted by Fitch for 2016. Both estimates would place the deficit within the region of $26-31bn.

The emirate had posted a budget deficit of AED32.4bn in 2015, or 3.9 percent of its gross domestic product (GDP), which was funded from cash reserves.

“The budgeted deficit in 2016 is expected to be financed principally by the issue of Notes under the Programme,” the prospectus said, adding that it will also be covered using the government’s existing cash balances,

The government, which didn’t give the size of the balances.

Said its sovereign wealth fund Abu Dhabi Investment Authority (ADIA), could be directed to pay dividends to the government to help cover any deficit.

Gulf states, which rely heavily on sale of hydrocarbons for revenues, have been looking to tap the international capital markets to shore up their finances. A drop in oil prices from a mid-2014 peak has dented revenues for six-member economic bloc of GCC, which rely heavily on sale of hydrocarbons for income and accounts for about a third of global oil reserves.

Saudi Arabia, the biggest regional economy, which has been drawn down its foreign reserves and raised funds by selling local currency bonds since August last year, is getting closer to raise $10bn from a group of international banks. The kingdom, the biggest oil exporter in the world, is expecting $86bn of budget deficit this year and is introducing sweeping reforms which include selling stakes in about 146 state-owned companies including Saudi Aramco, the world’s biggest oil producer.

The government of Oman is also considering issuance of a Eurobond in the first half of 2016, according to Hamoud Sangour al-Zadjali, governor of the Central Bank. Al-Zadjali plans to issue RO600m ($1.56bn) of domestic debt this year as well.