Dubai Plans to Raise Up to $4 Billion in Bond Program
Dubai's government hired Emirates NBD PJSC and Standard Chartered Plc to help it sell as much as 15 billion dirhams ($4 billion) of bonds that will help pay for construction projects and refinance old debt.
The size of the first sale is yet to be decided and the dirham-denominated bonds will be used ``for general capital purposes and infrastructure,'' Dubai's department of finance said in a statement today, without providing more details on the so- called medium-term note program.
Dubai, the second-biggest sheikhdom in the United Arab Emirates after Abu Dhabi, will spend $14.3 billion over the next five years to expand its road and rail network, the government said March 31. The economy will grow 11 percent a year to 2015 as expatriate workers swell the population, Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum said last year.
``Investors are not as comfortable buying dollar assets as they were a year ago, so selling in local currencies such as the dirham makes a lot of sense,'' said Hitesh Asarpota, deputy head of debt capital markets for National Bank of Abu Dhabi PJSC. ``The fact these will be direct government credits will attract investors.''
Meetings to promote the notes begin in Dubai today and will also be held in neighboring Bahrain, Emirates NBD Chief Executive Officer Rick Pudner said in a separate statement.
Dubai sold 1.5 billion dirhams of bonds in 2003 at a spread of 0.47 percentage point over benchmark rates. The debt matures on May 29. The sheikdom isn't rated by the major ratings firms, Bloomberg data show.
Dirham Comfort
Jebel Ali Free Zone FZE, Dubai's state-owned operator of a business park adjoining the Jebel Ali port, in November sold 7.5 billion dirhams of Islamic bonds maturing in 2012 after abandoning a plan to sell $2 billion of riskier lease-backed securities in dollars. The dirham bonds yield 1.39 percentage points more than the Emirates interbank benchmark rate.
State-controlled port operator DP World Ltd. in June sold $1.5 billion of 10-year Islamic bonds at a yield spread of 1.15 percentage points and $1.75 billion of 30-year conventional bonds at 1.6 percentage points.
Neighboring Abu Dhabi is ranked at AA by Standard & Poor's and Fitch Ratings, and an equivalent Aa2 from Moody's Investors Service, the third-highest investment-grade rating.
Sami al-Qamzi, the Dubai finance department's director general, wasn't available for comment when Bloomberg called his office. (Bloomberg)
The size of the first sale is yet to be decided and the dirham-denominated bonds will be used ``for general capital purposes and infrastructure,'' Dubai's department of finance said in a statement today, without providing more details on the so- called medium-term note program.
Dubai, the second-biggest sheikhdom in the United Arab Emirates after Abu Dhabi, will spend $14.3 billion over the next five years to expand its road and rail network, the government said March 31. The economy will grow 11 percent a year to 2015 as expatriate workers swell the population, Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum said last year.
``Investors are not as comfortable buying dollar assets as they were a year ago, so selling in local currencies such as the dirham makes a lot of sense,'' said Hitesh Asarpota, deputy head of debt capital markets for National Bank of Abu Dhabi PJSC. ``The fact these will be direct government credits will attract investors.''
Meetings to promote the notes begin in Dubai today and will also be held in neighboring Bahrain, Emirates NBD Chief Executive Officer Rick Pudner said in a separate statement.
Dubai sold 1.5 billion dirhams of bonds in 2003 at a spread of 0.47 percentage point over benchmark rates. The debt matures on May 29. The sheikdom isn't rated by the major ratings firms, Bloomberg data show.
Dirham Comfort
Jebel Ali Free Zone FZE, Dubai's state-owned operator of a business park adjoining the Jebel Ali port, in November sold 7.5 billion dirhams of Islamic bonds maturing in 2012 after abandoning a plan to sell $2 billion of riskier lease-backed securities in dollars. The dirham bonds yield 1.39 percentage points more than the Emirates interbank benchmark rate.
State-controlled port operator DP World Ltd. in June sold $1.5 billion of 10-year Islamic bonds at a yield spread of 1.15 percentage points and $1.75 billion of 30-year conventional bonds at 1.6 percentage points.
Neighboring Abu Dhabi is ranked at AA by Standard & Poor's and Fitch Ratings, and an equivalent Aa2 from Moody's Investors Service, the third-highest investment-grade rating.
Sami al-Qamzi, the Dubai finance department's director general, wasn't available for comment when Bloomberg called his office. (Bloomberg)
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