Dubai Electricity and Water Authority, which plans to price an Islamic bond of at least US$500 million on Thursday, further tightened price guidance ahead of launch due to high demand for the deal.
The state utility set final guidance at 3.0 per cent to 3.1 per cent, slightly tighter than previously released because of strong interest in the five-year deal. Arranging banks said order books hit $5.5 billion ahead of closing.
Regional traders said the paper was already trading up in the grey market.
The sukuk, DEWA's first global debt market outing since 2010, could raise up to $1bbn, and proceeds will be used to refinance existing maturities as well as for new projects.
At the current guidance, the sukuk should price in line with Dubai's outstanding $600m Islamic bond maturing 2017 , which was offering a bid yield of 3.03 per cent on Thursday morning, according to Thomson Reuters data.
This suggests the company is paying almost no premium over the sovereign, for an extended 10-month maturity.
DEWA, rated BBB, met fixed income investors in London and Asia this week ahead of the sukuk sale.
Standard Chartered, Citigroup, RBS and local lenders Emirates NBD, Dubai Islamic Bank and Abu Dhabi Islamic Bank are mandated joint bookrunners on the deal.