By Sam Bridge
Investors rush to invest in Dubai as order book for gov't bond and sukuk is five times oversubscribed
The Government of Dubai has announced the successful completion of a $2 billion bond issuance.
The Department of Finance (DOF) said the issuance consisted of ten-year Islamic sukuk of $1 billion at a profit rate of 2.763 percent and 30-year government bonds of another $1 billion at an interest of 3.90 percent.
Rashed Ali bin Obood, head of investors affairs at DOF, said: "The value of the order book exceeded $10 billion, five times more than the target value of the issuance. The strength of the order book as well as the diversity of the investor base reflect the strong confidence of international community in the resilience of the emirate's economy and the reaffirmation of superiority of Dubai’s credit globally."
"We are satisfied with the success of Dubai in this issuance. DOF was able to obtain the lowest interest rate for 30-year bonds and the lowest profit for 10-year sukuk in Dubai government history," added Abdulrahman Saleh Al Saleh, director general of DOF, in a statement.
"This issuance was in line with the determinants of the financial policy pursued by the emirate, which was based on financial sustainability and continued spending on vital infrastructure projects, while responding to the requirements of the current stage set in the budget priorities circular, issued at the beginning of the second quarter of this year," Al Saleh said.
Global investors made up 84 percent of the total investors in the long-term bond segment.
The Government of Dubai mandated Dubai Islamic Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, and Standard Chartered Bank to manage the issuance process.
Abu Dhabi earlier announced it has successfully completed a $5 billion multi-tranche bond offering to allow the emirate to focus on sustaining non-hydrocarbon sector expansion.
Underpinned by strong investor appetite, the bonds are priced at historic low yields and the issuance comprises three tranches - a $2 billion 3-year tranche, a $1.5 billion long 10-year tranche, and a $1.5 billion 50-year tranche.
The 50-year tranche is the longest term for a bond issued by a GCC sovereign issuer, a statement said.