Dubai plans bond to refinance debt
Dubai, September 17, 2012
Dubai plans to issue a bond to refinance part of 6.5 billion dirhams ($1.8 billion) of debt maturing in April 2013, its finance chief was quoted as saying by a newspaper.
Abdulrahman Al-Saleh, director general of the Dubai Department of Finance, was also quoted as saying by the Al Bayan daily that the emirate was not under pressure to sell debt.
Future bond issuance could support expansion of Dubai's aviation sector, he added.
Saleh did not discuss the size or timing of any new bond or give other details, and government officials were not available to confirm his comments. The newspaper did not provide verbatim quotes from the interview and appeared to be paraphrasing Saleh's remarks.
Unrated Dubai last sold sovereign debt in April this year - a $1.25 billion, two-tranche Islamic bond aimed at covering its budget deficit and refinancing debt.
Dubai's budget deficit narrowed sharply to 3.7 billion dirhams last year, helped by higher oil revenue and lower spending on development projects, a sovereign bond prospectus produced by the emirate in April showed.
Gulf bonds have rallied strongly in the secondary market this year because of downward pressure on global interest rates; Dubai names have led the rally as the emirate has made progress in resolving its corporate debt problems.
This has raised expectations that regional borrowers could take advantage of the favourable conditions by issuing debt in the near future.
Dubai's credit default swaps, which represent the cost of insuring against default, stood at 278 basis points on Monday, their lowest level since September 2008, Markit data showed. They tightened more than 15 bps on Wednesday, after the credit rating of state utility Dubai Electricity and Water Authority (DEWA) was raised to investment grade by Moody's.
The trade-driven economy of Dubai, one of seven United Arab Emirates, is showing positive signs based on growth rates in various sectors during the first half of 2012, Saleh was also quoted as saying by the newspaper.
The UAE central bank said this month that Dubai might achieve economic growth of 4 percent or more this year.
Dubai, which lacks the oil wealth of neighbouring Abu Dhabi, was hit hard by a $25 billion debt restructuring at its flagship conglomerate Dubai World in 2009-2010 after a real estate bubble burst. Restructuring at some other state-linked entities continues. - Reuters