Dubai Electricity and Water Authority (Dewa) yesterday priced its benchmark size dirham-denominated Islamic bond sale at the top of a previously indicated range, two bankers at arranging banks said.
The state-owned utility priced its Islamic bonds, or sukuk, at 125 basis points over the six-month Emirates Interbank Offered Rate (Eibor), said the bankers, who declined to be named.
The benchmark interest rate is now at 1.99 per cent.
The final size of the issue has yet to be decided, they said. Benchmark size is typically considered to be at least $500 million (Dh1.8 billion), but could be lower for a dirham-denominated issue.
The state-owned utility is returning to the market after postponing the sale of as much as $2.5bn in dollar-denominated bonds in November. The sale of the five-year floating rate Islamic bonds is managed by Barclays Bank, Citigroup, Dubai Islamic Bank and Emirates NBD.
The authority is aiming to invest $19bn to raise electricity-generating capacity by 150 per cent by 2012 from 5,000 megawatts and 255 million gallons per day of water, a prospectus given to investors last year showed.
It pulled its bond sale last year after defaults on U.S. home loans and the ensuing credit squeeze raised borrowing costs, prompting many Gulf borrowers to shelve bond sales as banks became more reluctant to lend.