Why wait?

29 September 2010 By Una Galani Follow @ugalani

It may seem too soon for the emirate to be selling its first bond since flagship conglomerate Dubai World was forced into a $25 bln restructuring last year. Creditors are still licking their wounds. But the emirate is right to see now as a good moment to test investor confidence.

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Dubai confirmed on Sept. 27 that it would shortly launch a twopart benchmark dollar bond in the government's first public sovereign issue since the financial crisis erupted last year.

The emirate said the proceeds of the fixedcoupon issue will be used for general budgetary purposes. The fiveyear bond carries an initial yield guidance of 6.75 percent and the 10year tranche is around 7.8 percent, according to bankers.

The order book for the dualtranche issue stood at over $5.5 billion as of 0740 GMT on Sept. 29, market sources told Reuters. A fund manager said Dubai was now eyeing $1.25 billion combined based on demand of over $3 billion for the 10year tranche and $2.5 billion for the fiveyear tranche with pricing guidance at 7.875 percent and 6.75 percent, respectively.

Dubai's most recent sovereign issue took place in November last year, barely a month before flagship conglomerate Dubai World announced it would restructure almost $25 billion of debt.

At the time, Dubai raised almost $2 billion in Islamic bonds with a fiveyear maturity.

The restructuring of Dubai World has the formal support of over 99 percent of creditors and is expected to be completed in the coming weeks.

HSBC, Deutsche Bank and Standard Chartered are acting as joint lead managers for the new issue.

Context News

Dubai confirmed on Sept. 27 that it would shortly launch a twopart benchmark dollar bond in the government's first public sovereign issue since the financial crisis erupted last year.

Dubai's most recent sovereign issue took place in November last year, barely a month before flagship conglomerate Dubai World announced it would restructure almost $25 billion of debt.

At the time, Dubai raised almost $2 billion in Islamic bonds with a fiveyear maturity.

The restructuring of Dubai World has the formal support of over 99 percent of creditors and is expected to be completed in the coming weeks.

HSBC, Deutsche Bank and Standard Chartered are acting as joint lead managers for the new issue.

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