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Dubai bond size may exceed $1b
Issac John / 29 September 2010
DUBAI — With Dubai all geared up for the dual-tranche Eurobond sale, the size of the order book was estimated to exceed $1 billion by sources at lead managers.
On Monday, Dubai mandated HSBC, Deutsche and Standard Chartered to lead the dollar-denominated bond, the first since last year’s debt crisis.
According to one source, the five-year issue would carry an initial yield guidance of 6.75 per cent, while the 10-year tranche may yield around eight per cent. Yet another source said the initial guidance on the 10-year tranche was around 7.875 per cent. The size is likely to total at least $750 million for the five-year tranche and up to $500 million for the 10-year tranche, another source was quoted as saying by news agencies.
Dubai has yet to get a credit rating but the books are scheduled to close on Wednesday. The latest bond sale is part of a $6.5 billion bond programme launched in October 2009, which was made up of $4 billion worth of euro-denominated medium term notes and a $2.5 billion Islamic loan.
Nakheel’s Dh6b sukuk
Analysts expect several government-related companies in Dubai to follow suit once the government bond issue succeeds. On Tuesday property developer Nakheel was reported to be preparing to launch a Dh6 billion Islamic bond as part of its debt repayment plan. In April, the Dubai Electricity and Water Authority raised $1 billion through five-year bonds.
Reuters quoted Ahmad Saif Belhasa, chairman of the UAE Contractors’ Association, “We have been expecting Nakheel to issue the sukuk, which would be around Dh6 billion before the end of the year,” as saying on Tuesday.
Under Nakheel’s restructuring plan, trade creditors have been offered 40 per cent of what they are owed in cash and the remaining 60 per cent through a sukuk Islamic bond.
Dubai contractor Arabtec’s chief financial officer Ziad Makhzoumi said Nakheel had applied for listing on Nasdaq Dubai. “The only place for a bond to be listed in Dubai is on Nasdaq Dubai,” Makhzoumi was quoted by Reuters as saying.
Nakheel said in a statement on Tuesday that it would restart construction on Garden View Villas, as it looks to recommence work on several projects.
“The Gardens development is expected to be completed in the third quarter of 2011,” it said in the statement.
· With inputs from Agencies
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