Dubai readies two-part dollar bond, first issue since crisis
Source: BI-ME with Reuters , Author: Posted by BI-ME staff
Posted: Tue September 28, 2010 12:37 am

UAE. Dubai said on Monday it would launch a benchmark dollar bond soon in its first debt sale since last year's crisis, and which financial sources said would be a US$1 billion-plus issue in two tranches.

Early pricing talk was for a 5-year tranche with yield guidance in the 6.875% area and a 10-year tranche in the 8% area, the sources said.

The bond is likely to total at least US$750 million for the five-year tranche and up to US$500 million for the 10-year, a banking source said, while a fund manager said pricing was expected on Tuesday.

The United Arab Emirates state, whose firms face some US$30 billion in bond and loan maturities in the next two years alone, has been gauging investor interest in a potential issue over recent months.

The fixed-coupon bond will be issued under its US$4 billion EMTN programme and the proceeds would be used for general budgetary purposes, the Dubai government said in a statement.

HSBC, Deutsche Bank and Standard Chartered will handle the placement.

The emirate's most recent sovereign bond sale was launched last October, barely a month before its flagship conglomerate Dubai World shocked global investors by calling for a debt moratorium.

"Investors globally are hungry for good yield, especially in emerging markets, where interest rates are at record lows," said Richard Fox, head of Middle East and Africa sovereign ratings at Fitch.

"This will hopefully improve appetite for an issue like this. We are expecting a minimum of US$1 billion," he said, adding it will help the emirate fund its 2010 budget deficit.

In August, a Dubai official said the 2010 budget gap would come lower than the AED6.0 billion (US$1.63 billion) planned.

The deficit widened to AED12.9 billion last year, the biggest gap since at least 2005 and above 4.2 billion planned, the prospectus for the new issue obtained by Reuters showed.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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UAE. New report shows that while more men use seed crowdfunding than women, women are more successful in reaching their finance goals; This is also true for the Middle East where women were also found to be more successful in achieving their finance targets (10% vs 6%).
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