Strong demand for Dubai debt

Dubai: Dubai-based international port operator DP World's benchmark-sized debt issues are attracting investor interest across the world, resulting in competitive pricing, according to investment banking sources.

The company is raising around $3 billion through two bond issues of 10-year and 30-year maturities.

"DP World is clearly aiming to extend its debt maturity profile by selling long-term Islamic and conventional bonds. The global response to the forthcoming issues and their pricing indicate that DP World and Dubai are emerging sources of high quality financial assets," said an investment banker close to one of the bond issues.

Seeking funds for acquisitions and mega projects, the region has witnessed a huge growth in international debt issues in the recent months. During the past six months alone, debt issues from the region exceeded $17 billion eclipsing the size of the money raised through equity issues during the height of the equity boom in 2005.

"There is a growing demand for corporate debt from the region, the government backed projects are likely to get higher ratings and better pricing," said Jan Willem Plantagie, managing director of infrastructure finance with Standard & Poors.

DP World's ten-year Islamic dollar bond, to be managed by Barclays, Citigroup, the Deutsche Bank and the Dubai Islamic Bank, while the long-term conventional dollar bond to be managed by Barclays, Citigroup, the Deutsche Bank and the Lehman Brothers.

The book runners of the issue said yesterday that DP World has narrowed price guidance on its 10-year Islamic bond to 115 basis points over US Treasuries maturing in May 2017.

Dubai Holding mandates banks for $1b loan

Dubai Holding has mandated bookrunners BNP Paribas, Citibank, Royal Bank of Scotland and Standard Chartered Bank to arrange a $1 billion, one-year revolving credit, a banking source told Reuters Loan Pricing Corp yesterday.

The deal, which includes two one-year extension options, will be used for general corporate purposes.

Syndication strategy is still being discussed but the transaction is likely to launch in July. Dubai Holding's previous loan was a $2.25 billion, 18-month facility that signed in July, 2006.

That deal, which backed the borrower's purchase of a stake in Tunisie Telecom, paid a margin of 70 basis points (bps) over Libor.

Dubai Holding consolidates the ownership of the emirate's state-controlled investments in fields including leisure, healthcare, property, technology, finance, energy and education.

- Reuters