Dubai: The $1 billion (Dh3.67 billion) five-year debut bond sale of Dubai Electricity and Water Authority (Dewa) has been more than 11 times oversubscribed, reflecting a turnaround in global investor sentiment towards the Middle East.
The book for the benchmark dollar bond stood at $11.5 billion, Dewa said on Thursday.
The company will pay a semi-annual coupon at a rate of 8.5 per cent to bond holders until the instrument reach maturity in 2015.
"Ultimately it is the market that determines the price and in this case I think the deal was very well received in the market — it was a fair price and hence the demand," said Chavan Bhogaita, head of credit research at National Bank of Abu Dhabi. "It certainly gives the investors a decent return, they liked the credit and they liked the story, which is clear from the substantial oversubscription."
Diversity
Thirty per cent of the investors come from Europe and the US, 25 per cent from Asia and 15 per cent from the Middle East, the company said.
"The roadshow was well received by investors who, on the back of recent positive market developments in the GCC (Gulf Cooperation Council), were keen to understand Dewa's underlying credit story," said Nasser Akil Abbas, treasury director of Dewa, in a statement.
The utility is 100 per cent government owned. It is rated Ba2 by Moody's and BBB- by Fitch Ratings.
The bond, coming after a delay due to difficult credit market conditions in the aftermath of Dubai World's surprise announcement that it sought to postpone a bond repayment in November, is part of Dewa's long-term strategy to expand its facilities.
Some of the regional issuers such as Banque Saudi Fransi had to hold off as jittery investors were reluctant to commit themselves at the end of 2009 and the beginning of this year.
In March, in the UAE, National Bank of Abu Dhabi raised $750 million from a five-year bond.
