Dubai launched a US$1.25 billion (Dh4.59bn) government bond today, kicking off its first round of fund raising since the financial crisis deepened late last year. The bond will be sold to investors in two tranches, one of $500m that matures in five years and another of $750m that matures in 10 years, according to Bloomberg and Reuters reports. The five-year debt is expected to yield 6.7 per cent, while the 10-year debt is expected to yield 7.75 per cent.
Investors placed bids on more than $5bn of bonds, according to reports, indicating strong appetite for Dubai's debt at a time when it is striving to show financial strength following a $24.9bn debt restructuring proposal by the state-owned Dubai World. The restructuring plan recently gained approval from 99 per cent of the conglomerate's bank creditors. Dubai raised the money following an update this week to the prospectus for a $4bn Eurobond programme launched in April 2008. Eurobonds are bonds denominated in US dollars but raised from institutions outside the US.
Dubai last raised money under the bond programme just weeks before Dubai World announced it would seek a standstill on debt repayments in November.
* with agencies