Another Dubai bond likely next year

Dubai: Dubai's government is "likely" to sell bonds next year with the size of the sales depending on its spending needs, and a Malaysian offering is a possibility, the director general of the Department of Finance said.

"The outcome of the budget will really tell us how much we need to raise," said Abdul Rahman Al Saleh, who was also named to holding company Dubai World's new board on Sunday, in an interview at his office in Dubai on Tuesday.

"We don't need to raise funds for refinancing" government debt, he said.

The Dubai government's debt repayments due next year and in 2012 are not "significant", Al Saleh said.

In October it paid a Dh800 million instalment on a Dh2.3-billion Islamic Ijara loan that was due next year, he said.

Development funding

State-owned Dubai World's plan to restructure $24.9 billion (Dh91.58 billion) debt roiled global markets last year. The Department of Finance in September raised $1.25 billion from a bond sale that received $5 billion in orders, its first sovereign securities sale since the Dubai World restructuring.

The emirate and its state-controlled companies ran up about $112 billion of debt, according to Barclays estimates, as it sought to transform into a trade, fin-ancial services and tourism hub.

Dubai's government debt, excluding that of state-owned companies, is $30 billion, Mohammad Ebrahim Al Shaibani, director general of the ruler's court, said on November 28.

The government hired CIMB Investment Bank Bhd as a lead arranger to help sell Islamic bonds in Malaysia that may raise between $1 billion and $1.5 billion, a person with knowledge of the deal said on November 24. The plan is still being discussed and the timing of the sale has not been decided, said the person.

"We already built our relations in Asia, specifically this year was very successful for us," said Al Saleh, who has been director general since May 2009. "The Malaysian market is good. We have good relations now with them and we see good opportunities."

Dubai's government forecast a budget deficit of Dh5.99 billion for this year after cutting expenditures by 14.4 per cent to Dh35.4 billion, according to its bond prospectus published in September.

Revenue was forecast to rise 3.5 per cent in the year to Dh29.4 billion.