Sunday, Jun 12, 2011
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DUBAI (Zawya Dow Jones)--The Government of Dubai plans to raise up to $5 billion under a Euro Medium Term Note, or EMTN, program, as the debt-stricken state looks to bridge its budget deficit and finance growth, according to the emirate's new base prospectus.
Dubai said on Thursday it plans to test credit-market sentiment again and issue a dollar-denominated, benchmark-sized bond under its existing EMTN program, amid signs that confidence in Dubai's economic fundamentals is slowly returning. The emirate has mandated UBS, RBS and Emirates NBD as joint lead managers for the new issue.
The Dubai government had set up a $4 billion EMTN program in April 2008, which it subsequently updated in Oct. 2009 and Sept. 2010. Under this program, the emirate has already raised 6.5 billion U.A.E. dirhams ($1.77 billion) in 2008 and $1.25 billion in 2010.
"The net proceeds from the issue of each Tranche of Notes will be applied by the Issuer for infrastructure, financing and general budgetary purposes," according to the emirate's base prospectus issued on June 10.
The Government of Dubai said in the prospectus it expects an overall budget deficit of AED3.8 billion in 2011 as it sees revenues of AED29.9 billion, and total expenditure at AED33.7 billion.
Dubai's new debt issue plans come just a week after Emirates Airline, the government-owned carrier, launched a five-year, $1 billion bond that received high levels of investor interest.
The announcement by Dubai World, the government-owned conglomerate, that it had secured full approval from creditors to restructure $25 billion in debt earlier this year has helped rebuild some confidence in Dubai and its ability to manage its debt pile, which some analysts estimate to stand at as much as $110 billion.
The total outstanding external term borrowings of the Government of Dubai stood at $31.4 billion as on May 20, 2011, in addition to which the government also has financial contingencies and extended guarantees, according to an investor presentation made Friday by the emirate's department of finance.
The emirate has also recently benefited from its perceived safe haven status as uprisings throughout the Middle East have weighed heavily on local economies.
Dubai has appointed Mitsubishi UFJ Securities International, Standard Chartered and UBS Investment Bank as arrangers and dealers for the EMTN program; while it has appointed Emirates NBD and National Bank of Abu Dhabi as dealers for program.
-By Nikhil Lohade, Dow Jones Newswires, +9714 446 1694, nikhil.lohade@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
12-06-11 1159GMT
