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Wed 22 Jul 2009 02:23 PM

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Dubai support fund reassuring but more transparency needed - HSBC

Economist says a lot of questions remain unanswered and urges government to release further data.

Dubai support fund reassuring but more transparency needed - HSBC
BOND FUND: HSBC economist says Dubais $20bn bond programme is reassuring. (Getty Images)

The launch of a support fund to manage Dubai’s $20bn bond programme is reassuring but the market will be looking for more transparency, HSBC’s Middle East economist has said.

"The careful management of the proceeds of the $20 billion bond programme is absolutely crucial to Dubai's near and medium term outlook,” Simon Williams said.

“It is reassuring to see the establishment of a formal structure for the disbursement of funds that seems to have sufficient reach to co-ordinate the disparate needs of the emirate.”

However, he added that a lot of questions remain unanswered and called on the government to release data on how the proceeds from the first $10bn tranche of bonds, sold to the UAE Central Bank in February, has been distributed.

“The market will be looking for transparency. If they are not going to reveal who the funds have flowed to, I hope they will disclose how much has been disbursed and what remains in reserve," he said.

Earlier on Wednesday, Dubai’s Department of Finance said it is to launch a support fund for the government’s $20bn bond programme.

The fund will provide loans on a commercial basis to government and government-related entities (GREs) engaged in projects deemed to be of “strategic and developmental importance” to the emirate, it said.

A spokesman for the department told Arabian Business that that it is currently in the process of raising the second tranche of bonds.

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venkat 11 years ago

It is a very important move to restore confidence of the investors in the emirates. It is very important that all infrastructure project are on line with the new investments. If all the giant Govt. Companies show resilliance with the injection of usd 20 billion dollars the health of the nation improves automatically. Dubai is very strong and defenitely has the courage to overcome recession