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29 March 2024

Dubai's $750m sukuk oversubscribed 3 times

The Dubai Government’s $750 million (Dh2.75 billion) Islamic bond (sukuk) was oversubscribed more than three times, showing strong confidence in the emirate’s economy and its bid to become the global hub for Islamic finance.

Published
By Waheed Abbas

The Dubai Government’s $750 million (Dh2.75 billion) Islamic bond (sukuk) was oversubscribed more than three times, showing strong confidence in the emirate’s economy and its bid to become the global hub for Islamic finance.

The Department of Finance said in a statement on Wednesday that it raised $750 million through a 15-year sukuk which saw oversubscription of $2.3 billion with a price of five per cent.

The funds will be used for general budgetary purposes. The sukuk will cover Dubai’s small budget deficit of $240 million this year.

The Department of Finance said the issue was completed in a short time to benefit from favourable conditions in the global financial markets.

Dubai earlier tapped the debt market in January 2013 when it had raised $1.25 billion with a two-tranche sale made up of a 10-year sukuk and 10-year conventional bond.

The new $750 million issue, according to Department of Finance, attracted 79 investors from all over the world with 61 per cent from Middle East, 17 per cent from Britain, 10 per cent from rest of Europe, nine per cent from Asia and two per cent from other regions.

Three banks accounted for 60 per cent of investors, sovereign fund managers at 27 per cent and ten per cent others.

The sukuk was arranged by Emirates NBD, Abu Dhabi National Bank, HSBC, Dubai Islamic Bank and Standard Chartered Bank.

Abdulrahman Saleh Al Saleh, Director-General of the Department of Finance, said oversubscription points out that it represents the first release for a period of 15 years.

He said the sukuk offering comes in the context of the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, to make Dubai a global capital of Islamic finance.