Dubai raises $1.25bn in two tranches

Sukuk over three-and-a-half times oversubscribed

The Government of Dubai, acting through the Department of Finance, on Thiursday announced that it has successfully raised $1.25 billion across 5 and 10 year tranches, which was over three and a half times oversubscribed demonstrating strong investor appetite.

The well planned and swift execution took advantage of a positive market environment and priced at the tight end of guidance at 4.9 per cent and 6.45 per cent all in yield for a $600 million 5 year and $650m 10 year respectively, according to a press release distributed today by the Government of Dubai Media Office.

This issuance is part of the updated Trust Certificate Issuance Programme, which was established in October 2009. Proceeds of the Sukuk will be used for general budgetary purposes and refinancing.

The Sukuk sale was extremely well received globally and generated a large order book with over 260 investors placing orders of over US$4.5 billion. Orders were made by a wide range of high quality fixed income investors, including fund managers, insurance companies and banks. The Sukuk were priced at par.

Abdulrahman Al Saleh, Director General, Department of Finance, said: “We are very pleased at the positive market reception to the Sukuk offering, which demonstrates increased investor confidence in the strong long-term value proposition of the Emirate of Dubai and the vision of its Ruler His Highness Sheikh Mohammed bin Rashid Al Maktoum.

"Investors were happy with the steps taken by the government over the last three years to counter the impact of financial crisis and prudent measures to control costs and manage its budget deficit. We have been able to reduce our cost of funding by 0.7 per cent in the 5 years and 1.30 per cent in the 10 year maturity compared to our previous issuances for similar tenors.

"We continue to examine ways to optimize our funding strategy by diversifying our funding options and extending maturities. This Sukuk issuance provides us enough liquidity to manage our budget deficits and refinancing plans proactively,” Al Saleh said.

Citigroup, Dubai Islamic Bank, HSBC, and National Bank of Abu Dhabi were the Joint Lead Managers for the issue.

Abu Dhabi Islamic Bank, Barwa Bank, and ENBD were the Co-Lead Managers for the issue.


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