* Middle East investors take 52 percent of 10-yr sukuk
* Funds allocated 79 percent of 30-yr paper
* Both tranches substantially oversubscribed
DUBAI, Jan 23 The government of Dubai priced a
two-tranche bond sale late on Tuesday, comprising both
conventional and Islamic notes, as the emirate took advantage of
its improved image among investors to secure long-term finance.
The $500 million 30-year conventional bond, maturing January
2043, priced below par at 98.148 to result in a yield of 5.375
percent. The bond offers a coupon of 5.25 percent.
Dubai's $750 million 10-year Islamic bond, or sukuk,
maturing January 2023, priced at par, and carries a profit rate
of 3.875 percent.
Both portions of the debt sale were substantially
oversubscribed, allowing the emirate to secure some of the
lowest borrowing costs available to it.
Dubai has strived to regain its credibility among investors
after it rocked global markets in 2009 with its $25 billion
restructuring request for state entity Dubai World. It has since
successfully refinanced or reorganised debt while benefiting
from its status as a regional safe haven amid the Arab Spring
The 10-year sukuk received orders of $11 billion. Fifty-two
percent of the paper was placed in the Middle East followed by
26 percent in Britain. By investor type, banks were allocated 46
percent, followed by funds with 34 percent. The rest was evenly
placed with private banks and other investors.
Of the 30-year conventional deal, investors in Britain
received the highest allocation at 38 percent, followed by
Europe at 24 percent and U.S. investors at 22 percent.
Funds were allocated a massive 79 percent of the paper,
followed by banks at 12 percent, with private banks and other
investor types given 8 percent and 1 percent respectively.
Dubai Islamic Bank (DIB), Emirates NBD,
HSBC Holdings, National Bank of Abu Dhabi and
Standard Chartered arranged the sukuk, while the same
banks, minus DIB, were bookrunners on the 30-year bond.