* Co could issue $1 billion from sukuk sale
* Early profit rate talk at low 3 pct area
* Sukuk to price this week, take advantage of narrowing
(Adds quote, details)
DUBAI, Feb 26 Dubai Electricity and Water
Authority plans to issue an Islamic bond, or sukuk,
of at least $500 million this week, after releasing early price
guidance for the deal on Tuesday.
The emirate's sole utility, rated BBB, is aiming to sell the
dollar-denominated sukuk at a profit rate in the low 3 percent
area, arranging banks said.
DEWA Chief Executive Saeed Mohammed al-Tayer indicated last
week the sukuk would be $1 billion and that proceeds would be
used to repay debt.
As one of the strongest credits in Dubai, DEWA's sukuk is
widely expected to attract strong investor demand. The company's
representatives are meeting investors in London and Kuala Lumpur
"The combination of the DEWA credit and sukuk format is one
that should resonate well with investors," said Chavan Bhogaita,
head of markets strategy unit at National Bank of Abu Dhabi.
"It gives them access to a credit that is one of the top
tier names in 'Dubai Inc' whilst being in an asset class where
supply is arguably still outstripped by demand."
DEWA last tapped global debt markets in October 2010, when
it priced a $2 billion, dual-tranche conventional bond. The
improvement in Dubai's image among investors since then may help
it win better pricing relative to the rest of the market.
Its outstanding $500 million 6.375 percent bond
maturing 2016 was bid at 112.4 cents on the
dollar on Tuesday afternoon to yield 2.8 percent, according to
Thomson Reuters data.
Its 2020 maturity, a $1.5 billion bond with a coupon of
7.375 percent, was bid at about 122 cents on Tuesday to yield
about 4 percent. Yields have widened about 40 bps since Jan. 10
to coincide with the general sell-off in credit markets.
However, they have stabilised since Feb. 19, which should
benefit DEWA as they can issue while rates remain attractive.
Standard Chartered, Citigroup, RBS
and local lenders Emirates NBD, Dubai Islamic Bank
and Abu Dhabi Islamic Bank are mandated
joint bookrunners on the deal.
(Reporting by Rachna Uppal and Mala Pancholia; Editing by David