Dubai raises $1.25bn in mixed-bond issuance

Dubai said on Wednesday it raised $1.25 billion (940 million euros) through the sale of Islamic and conventional bonds that was 12 times oversubscribed in a new sign of a recovering confidence in the indebted emirate. The issues include 10-year Sukuk Islamic bonds of $750 million and $500 million in 30-year conventional bonds, the government of Dubai said. The Sukuk were priced at a profit rate of 3.875 percent, while the conventional bonds carry a 5.250 percent coupon, it said, pointing out that the issuance "was 12 times oversubscribed by a high quality and diversified base." Proceeds will be used for general budgetary purposes and refinancing. "We have come a long way since 2009 as a credit," said Abdulrahman al-Saleh, the head of Dubai's department of finance. He was referring to the year the glitzy emirate rocked global markets with a request to freeze payments on debt owed by a government-related entity, Dubai World. The emirate's largest group announced in March 2011 that it has signed a final agreement to restructure $14.7 billion of debt. "Investors who have been with us during the tough times are getting the benefit of the support given to us by them," said Saleh. In April, Dubai announced that it also raised $1.25 billion through the issuance of five- and 10-year Islamic bonds, with more than $4.5 billion in bids. And in June, government-owned airline Emirates raised $1 billion from the sale of five-year bonds. In September 2010, Dubai successfully issued a $1.25 billion bond that was four times oversubscribed. Dubai appears to have restored some confidence since its economic crisis, reaping the benefits of steady economic growth on the back of strong performance in trade, transport and tourism. It has also remained stable despite uprisings across much of the Arab world, reportedly becoming a safe haven for flight capital.