The United Arab Emirates may issue its first ever sovereign federal bond toward the end of 2012 after a public debt law is signed this summer, the financial affairs minister said.

The UAE's top advisory council passed a new public debt bill in December with the aim of establishing a debt market in the world's No. 3 oil exporter. The legislation needs presidential approval before becoming law.

"The law will be signed this summer hopefully and will take effect immediately so we will be in a position if we need to issue any bonds toward the end of 2012," Obaid Humaid Al-Tayer told Reuters on the sidelines of a financial conference.

"We would need 18 months before we issue any bonds."      

The ministry had been gradually shifting expectations for bond issues over the past months. Al-Tayer said this week there would be no issue before 2012 after saying in January he expected it toward the end of 2011 or early next year.

The UAE central bank governor said this month the Gulf country -- rated Aa2 by Moody's -- needs to double efforts to create a local market for government and corporate bonds as it lacked sufficient government debt instruments.      

The Opec member has so far seen sovereign bonds issued only by some of its seven individual emirates such as Abu Dhabi and Dubai, and analysts have said federal issues would help revive the local currency debt market.

The new public debt law limits UAE government debt to 25 percent of the Gulf country's gross domestic product, or 200 billion dirhams ($54.5 billion).           

Al-Tayer also said that the government would spend $1.6 billion over three years to expand electricity and water networks in less developed northern Emirates.     

The UAE, which enjoys one of the world's highest per capita incomes at nearly $49,000, has been spared protests that rocked nearby Bahrain, Oman and Yemen. - Reuters