DEWA's six and 10-year bonds are its second issue this year and follow last month's successful offering by the government of Dubai.
"The overall size is looking like $2 billion," the source said.
Price guidance for DEWA's dual-tranche bond is 6.375 per cent for the $500 million six-year tranche and 7.375 per cent for the $1.5 billion 10-year tranche, IFR Markets, a unit of Thomson Reuters, reported.
This is tighter than Thursday's initial guidance of 6.5 to 6.625 per cent for the six-year tranche and 7.5 to 7.625 per cent for the 10-year tranche.
Lead managers for the issue are Citi, Credit Agricole, National Bank of Abu Dhabi, RBS and Standard Chartered. Analysts expect solid demand for DEWA's paper after short-term debt concerns eased following Dubai World's $24.9 billion restructuring deal last month, as well as increased global investor appetite for riskier, higher-yielding assets.
Moody's raised DEWA's credit outlook to positive from stable this week, saying its ratings could be upgraded over the medium term. DEWA, the monopoly supplier of electricity and water in the Gulf Arab emirate, needs to obtain approval for its borrowings from the Dubai government, its sole owner.
In April, 'Ba2'-rated DEWA was the first Dubai name to unfreeze the market locked by Dubai's debt woes, attracting $11.5 billion in bids for a $1 billion bond, even despite a high 1.25 per cent premium to the underlying sovereign.
Dubai sold a $1.25 billion bond last month, its first since the debt crisis last year, drawing demand of over $5 billion.
The unrated sovereign issue was priced at a yield of 6.7 per cent on the $500 million five-year tranche and 7.75 per cent for the $750 million 10-year tenor. The yield on DEWA's five-year paper stood at 6.304 per cent on Thursday, down from Wednesday's close of 6.389 per cent and May's high of 8.688 per cent.
The comparable Dubai bond was at 6.283 per cent on Thursday.