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Sat 9 May 2009 10:15 AM

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Dubai companies will look to bonds over IPOs - expert

Bonds will play 'critical' role in financing in next 2-3 years, says CEO of DFSA.

Low investor demand for new share offerings in the next few years could see Dubai companies looking to sell bonds instead to raise cash, according to the emirate's chief financial regulator.Speaking on the sidelines of the Islamic Finance services Board summit on Singapore on Friday the CEO of the Dubai Financial Services Authority said there would be little room for IPOs in the UAE in the coming years.

“In the next two to three years bonds will play a far more critical role in the financing of companies rather than equity,” said Paul Koster in an interview with news agency Bloomberg.

Companies in the UAE have sold AED1.89bn ($514m) of equity in three initial public offerings in the past year, according to the news agency.

However, benchmark stock indexes for Dubai and Abu Dhabi have fallen more than 47 percent.

Meanwhile, Persian Gulf companies raised at least $7.7bn from debt markets during the same period, the news agency added.

“Clearly people are being quite cautious about equity issues” from the Persian Gulf, said another summit delegate Philip Thorpe, chairman of the Qatar Financial Centre Regulatory Authority.

But, “there is clearly an appetite for good quality” debt, he added.

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