Dubai repays $1 billion sukuk

Debt issue of $1.93b receives overwhelming response after international roadshow

  • By Babu Das Augustine, Deputy Business Editor, Gulf News
  • Published: 18:16 November 8, 2009

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  • Image Credit: Gulf News

Dubai: The Government of Dubai's Department of Finance said on Sunday that it has repaid in full the $1-billion (Dh3.67 billion) Dubai Civil Aviation Authority sukuk, which matured on November 4.

This comes after the Government of Dubai issued a two-tranche, $1.93-billion sukuk on October 28, following a successful international roadshow, which generated a large order book with over 300 investors placing orders in excess of $6.3 billion equivalent.

"Dubai International Airport has grown rapidly in recent years and has a current annual passenger capacity of 50 million with this number set to continue rising. The achievements and bright prospects of Dubai were recognised by the global investment community on our recent international roadshow where we were delighted by enthusiastic investor appetite and high levels of confidence in the Emirate," Abdul Rahman Al Saleh, Director General, Department of Finance, said in a statement.

With investors showing huge interest in recent Dubai Government bonds, analysts expect more investors buying future sovereign issues from Dubai.

Credit default swap rates for five-year Dubai debt is hovering around 300 basis points, well below 943 points in February.

Dubai had announced $20-billion bond programme earlier this year and raised $10 billion trough a placement with the Central Bank of the UAE.

The $10-billion second tranche is expected to hit the markets before the end of this year.
"We consider Dubai credit as attractively priced at current levels. We recommend a long position in Dubai sovereign credit," Alia Moubayed a London-based analyst with Barclays Capital wrote in a report last week.

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