Buoyed by its recent success, Dubai plans to enter debt market with a dollar bond issue under its $4 billion medium-term notes program. Dubai’s department of finance has appointed UBS, Royal Bank of Scotland, and Emirates NBD for the bond. The proceeds from the issue will be used for general budgetary purposes, according to a report. Private meetings with the investors are scheduled for next week in London.
In September, Dubai came to the debt market with a portion of $1.25 billion bond. The issue was oversubscribed four times. There is a general enthusiasm among investors for higher yield investments. The Gulf Arab emirate, which is trying to come out of the debt trap following a fiscal crisis in 2009, had issued a $1bond last week at the tighter end of guidance with an estimated orderbook of over $5 billion.
Benchmark bond sales are usually at $500 million.
Chavan Bhogaita, head of markets strategy department at National Bank of Abu Dhabi, said that the timing of the issue is perfect as in general appetite for Dubai debt has been rising in recent months. Also the recent restructuring of Nakheel and Emirates has made it comfortable for regional and international investors.
Dubai’s five-year credit default swaps were at 321 basis points on Thursday, down 2 basis points from Monday, according to Markit data.