Dubai Holding could raise almost $1 billion from the sale of its minority stakes in two telecoms firms, J.P. Morgan said in a research note, part of a strategy by state-linked companies to sell assets to repay the emirate's debt pile.
The conglomerate, owned by the ruler of Dubai, is among a group of state-linked companies trying to recover from a 2009 property crash. The firms face debt repayments of about $50 billion over the next three years.
Dubai Holding's unit Emirates International Telecommunications LLC (EIT), has put its 26-percent stake in mobile phone retailer Axiom Telecom and 35-percent stake in Tunisie Telecom on the block, sources aware of the matter told Reuters in June.
Citigroup Inc is advising on the sale of Axiom stake, while Credit Suisse has been hired to help sell the Tunisie Telecom stake, the sources said.
JP Morgan has valued the Tunisie Telecom stake at $650 million and the Axiom Telecom stake at $300 million, the U.S. investment bank said in a credit research note dated July 4.
EIT bought the Tunisie Telecom stake from the Tunisian government for $2.25 billion in 2006.
"Although we have always expected DUBAIH (Dubai Holding) to sell these non-core stakes, management in the past has been vague about timing," J.P. Morgan analyst Zafar Nazim wrote in the note.
"Appointment of advisers increases the likelihood of the transaction getting completed, potentially in the next 6-12 months."
The bank's note upgraded Dubai Holding's 2017 bonds to "overweight" from "market weight" rating, saying current prices did not factor in proceeds from the sale of the telecom stakes.
Dubai Holding's 500 million pound ($744 million) 2017 bond was trading at 99.125 basis points to yield 6.17 percent on Monday, according to Thomson Reuters data.
In the research note, titled "Buy Dubai Real Estate", J.P. Morgan also advised clients to buy Islamic bonds of state property developer Nakheel calling it the bank's "top overweight" recommendation. It upgraded Emaar Properties' 2019 bond to "overweight".