Thursday, Apr 26, 2012
DUBAI ( Dow Jones)--The government of Dubai on Thursday said that its two-tranche, $1.25 billion Islamic bond, or sukuk, was more than three-and-a-half times oversubscribed, attracting orders from more than 260 investors.
The five-year tranche of $600 million was priced at 4.9%, while the 10-year tranche of $650 million will yield 6.45%, according to a statement from the Dubai government. Orders were made by a wide range of fixed income investors including fund managers, insurance companies and banks.
Dubai said it will use the funds for general budgetary purposes and refinancing.
"Investors were happy with the steps taken by the government over the last 3 years to counter the impact of financial crisis and prudent measures to control costs and manage its budget deficit," said Abdulrahman Al Saleh, director general at the department of finance. He added Dubai has lowered its cost of funding by 0.7% for the five-year requirements and by 1.3% for the 10-year maturities compared to previous issuances.
"This sukuk issuance provides us enough liquidity to manage our budget deficits and refinancing plans proactively," Al Saleh said.
Dubai's new bond sale is the first time it tested credit markets since June 2011 when it issued a 10-year bond worth $500 million, attracting orders over $1.8 billion.
-By Nicolas Parasie, Dow Jones Newswires, +9714 446 1681, firstname.lastname@example.org
Copyright (c) 2012 Dow Jones & Co.
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