Dubai wealth fund readies bonds, COVID-19 may hit revenue

The group of banks mandated for the deal includes Citi, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, JPMorgan and Standard Chartered

  
Image used for illustrative purpose. Dubai Marina skyline.

Image used for illustrative purpose. Dubai Marina skyline.

Getty Images

DUBAI - Investment Corporation of Dubai (ICD), the Dubai government's main investment arm, is planning an issue of U.S. dollar-denominated bonds amid expectations of lower revenues from its assets due to the coronavirus crisis.

It has hired banks including Citi, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, JPMorgan and Standard Chartered, to arrange investor calls ahead of the issuance, a document from one the banks showed on Monday.

ICD, which as of the end of last year had total assets worth around $305 billion, owns stakes in Emirates airline and Dubai's biggest bank, Emirates NBD.

The planned fixed rate, long five-year senior unsecured conventional bonds are part of a $2.5 billion bond issuance programme, according to the document.

The deal would follow a $2 billion bond sale by the government of Dubai last month, its first in public debt markets in six years, as the emirate replenished state coffers amid the coronavirus crisis.

"Although a decrease in revenues of ICD's portfolio companies is expected, the duration, impact and severity of such decrease or the rapid spread of the outbreak ... on the Group's results cannot be predicted," a bond prospectus seen by Reuters said.

"ICD is unable to quantify in any meaningful way the likely scale of the impacts since the duration of the outbreak is currently unknown but such impact could be significant, particularly in the short term," it said.

Emirates has cut thousands of jobs this year amid a cash crunch caused by the pandemic, sources have said.

The government of Dubai provided 7.3 billion dirhams ($1.99 billion) to the airline it owns after Dubai's crown prince in March promised equity to Emirates to see it through the crisis. 

($1 = 3.6728 UAE dirham)

(Reporting by Davide Barbuscia and Yousef Saba; Editing by Muralikumar Anantharaman and Andrew Cawthorne) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))

More From Wealth Management