Confident Dubai raises $1.25bn as it returns to the bond market
THE GOVERNMENT of Dubai cemented its comeback to the bond markets late on Tuesday, comfortably selling $1.25bn (£787m) in notes as the Middle Eastern state takes advantage of its improved image among investors.
It launched both a $750m 10-year Islamic bond – known as a sukuk – as well as offering a more conventional $500m 30-year bond.
Both portions of the debt sale were substantially oversubscribed, allowing the emirate to secure relatively low borrowing costs.
The 10-year sukuk launched at 3.875 per cent, while the longer-term debt will yield 5.375 per cent.
Dubai has strived to regain its credibility among investors after it rocked global markets in 2009 with its $25bn restructuring request for state entity Dubai World.
It has since successfully refinanced or reorganised debt while benefiting from its status as a regional safe haven amid the Arab Spring turmoil.
The 10-year sukuk received orders of $11bn. Over half (52 per cent) of the paper was placed in the Middle East followed by 26 per cent in Britain. By investor type, banks were allocated 46 per cent, followed by funds with 34 per cent. The rest was evenly placed with private banks and other investors.
Of the 30-year conventional deal, investors in Britain received the highest allocation at 38 per cent, followed by Europe at 24 per cent and US investors at 22 per cent.
Dubai Islamic Bank (DIB), Emirates NBD, HSBC Holdings, National Bank of Abu Dhabi and Standard Chartered arranged the sukuk, while the same banks, minus DIB, were bookrunners on the 30-year bond.