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Dubai plans bond roadshow

Dubai, October 19, 2009

Dubai is launching meetings from Thursday to test appetite for future debt from the emirate after one of its most troubled state-linked firms paid off $1.2 billion in debt, a sign confidence is returning to the emirate.

Dubai propelled itself into the spotlight as a tourism hub during a six-year oil-fuelled boom, but the downturn rocked its foundations based on excess lending and a transient expatriate population.

The Dubai government said on Monday it planned fixed income roadshows across Europe, Asia and the UAE from October 22, but added the meetings were not linked to its $20 billion bond programme aimed at assisting state-linked firms.

A prospective international bond sale would be the first from the emirate in more than a year and comes after Dubai International Capital, an investment firm owned by the ruler of Dubai, last week launched syndication for a $550 million loan.

The Dubai government and its state-linked firms have outstanding debt of about $80 billion. Dubai raised $10 billion in emergency cash from the UAE's central bank early this year through a bond issue as part of a plan to raise a total of $20 billion to finance obligations still pending.

A member of Dubai's ruling council said this month another $10 billion bond tranche may be sold in bonds, as early as this month.

"The government of Dubai would like to clarify that the investor meetings announced this morning and are currently being arranged ... are completely independent of any ongoing discussions with regard to the second, $10 billion tranche of the $20 billion bond programme of the support fund," a finance department official told Reuters.

Investors -- often starved of information in a region known for its lack of tranparency -- are keen to see how Dubai is able to tap markets as its real estate sector slumps under the weight of the financial crisis.

The emirate has at least $4.5 billion to restructure over the next two months, including a $1 billion Islamic bond from the emirate's civil aviation departmnent and the world's largest Islamic bond to date, a $3.5 billion issue, from property developer Nakheel.

"They are drumming up interest again," Haissam Arabi, CEO and fund manager of Gulfmena Alternative Investments. "It means people will get to see first hand and ask questions about what's happening. It puts Dubai into communication with the market they want to tap in the future and opens the door to look at the books and the numbers irrespective of the outcome."    

Shares in Dubai have rallied over the last month after the emirate's ruler and the chairman of its financial crisis committee both looked to calm markets after saying the seaside emirate, famed for palm-shaped manmade islands, would be able to service its debt.

Dubai's main index rose almost 1.4 percent on Monday after bankers said Nakheel had repaid a $1.2 billion securitised bond, a month ahead of its maturity date. -Reuters  




Tags: Dubai | bond | fixed income |

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