Dubai fund ICD may raise $2bn loan target

Sources say Investment Corporation of Dubai mulling loan increase on back of significant demand
Dubai fund ICD may raise $2bn loan target
By Reuters
Fri 24 May 2013 10:59 AM

Investment Corporation of Dubai (ICD), the holding company for some of the emirate's best-known companies, may increase the size of a $2bn loan after significant interest in the deal from lenders, banking sources said.

Strong demand for the loan is a sign of renewed confidence among bankers in Dubai, which is recovering from the aftermath of a real estate crash and sovereign-linked debt crisis which followed the global financial meltdown of 2008.

The loan has been marketed since mid-March, with $1.6bn of the $2bn target already pledged by the eight arranging banks, one of the banking source said.

ICD is currently deciding whether to increase it from the original $2bn target, with the transaction set to close in the next couple of weeks, two of the bankers said, speaking on condition of anonymity as the information isn't public.

The final deal size could be as high as $2.5bn, the second banker said, although nothing has been decided.

ICD is Dubai's flagship investment vehicle, holding stakes in many of its top companies, including Emirates airline, lender Emirates NBD and developer Emaar Properties.

Dubai's economy has shown signs of recovery in recent months. Property prices have started to pick up which has stimulated new projects and the Dubai stock market - up 42.1 percent year-to-date - is one of the best-performing benchmarks globally.

Dubai's debt crisis led to the restructuring of billions of dollars of bank loans, leaving many lenders wary of further lending to the emirate. Now the economy is recovering, banks are beginning to reconsider providing new cash to Dubai entities.

"Last summer, Dubai was off the agenda for most banks but this deal has seen plenty of people come in," said the second banker, whose bank has joined the transaction.

"It's an easy first step back but it's still significant in showing the re-emergence of Dubai," he added, pointing to the fact ICD is one of the most creditworthy Dubai borrowers.

ICD did not immediately respond to a request for comment.

The deal refinances an existing $2bn loan that is due to mature in August. That loan was part of a $6bn facility that ICD raised just as Lehman Brothers collapsed in September 2008. The first $4bn was repaid in 2011.

Abu Dhabi Commercial Bank, Citigroup, Commercial Bank of Dubai, Emirates NBD and HSBC are leading the conventional bank tranche and Abu Dhabi Islamic Bank, Dubai Islamic Bank and Standard Chartered are leading an Islamic portion.

The loan carries an interest rate of 215 basis points over the London interbank offered rate (LIBOR), sources told Reuters LPC in March.

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