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Dubai's bond plan likely to target $1bn first

Dubai, October 27, 2009

The government of Dubai's fresh borrowing programme is likely to initially raise $1 billion through an Islamic bond to refinance the debt held by the aviation department, said the head of Emirates NBD Capital, which is involved in the programme.

Chief Executive Suresh Kumar told Reuters on Tuesday that the first tranche, part of the $6.5 billion conventional and Islamic bond programme launched last week, would set the benchmark for the rest and the pricing would have a spread of around 300 basis points.

"My sense is it will be focused on the Islamic certificate programme to raise possibly $1 billion to be used to meet the maturity of the DCA (Department of Civil Aviation) sukuk," Kumar told the Reuters Investment Summit in Dubai.

"The initial response has been very good. This is likely to be done over a period of time and the intention is not to take all the money it takes in the book ... it has to be a benchmark."

Credit default swap rates for five-year Dubai debt stand at just below 300 basis points.

"This CDS, currently around 300 basis points, is a reasonable indication to expect the pricing to be around. But the response has been strong and if that's sustained it's likely that the financing pricing will tighten rather than widen from this level.

The government of Dubai launched a total of $6.5 billion bond plan last week, consisting of $4 billion euro medium-term note and a $2.5 billion Islamic bond programme. – Reuters




Tags: Dubai | sukuk | DCA | bond | Emirates NBD |

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