Dubai bonds get positive response

Dubai’s planned Islamic bond issue attracted bids worth $5 billion for the dollar-denominated offer and dhs5.7 billion ($1.55 billion) for the dirham-floating note, bankers invol-ved in the deal told the Bloomberg news wire The emirate’s five-year fixed rate dollar bond may be priced to yield 375 basis points above the midswap rate, while its dirham Islamic bonds, or sukuk, may be priced at the same spread above the three-month interbank offered rate, according to the bankers who didn't want to be identified because the sale hasn’t been comp-leted yet.

Dubai and its state-controlled companies are raising funds after they amassed $80 billion of debt during a four-year real estate boom, which produced the world’s tallest building and largest man-made islands.

The global credit crunch had raised concern that the emirates may be unable to meet its debt obligations.

“The order book shows that Dubai’s story is gaining credibility,” Chavan Bhogaita, head of credit research at National Bank of Abu Dhabi, said.

“The sukuk format makes sense for Dubai now.

There has been a lack of issuance in the Gulf sukuk market in recent months and they want to take advantage of the demand for this asset class.”

Islamic debt is governed by Sharia laws barring investors from profiting from the exchange of money, as happens with interest payments on other bonds.

Returns from exchanging funds for assets is allowed, as long as gambling, guns and alcohol aren’t involved.

Categorized | Business News

Tags : attracted-bids, been-comp-leted, bloomberg, chavan-bhogaita, credit-research, dhs5-7-billion, dubai, exchange, four-year-real, from-exchanging, national-bank, raised-concern, the-three-month

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Dubai bonds get positive response

Categorized | Business News

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