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Wednesday, 15 June 2011

FT.com / Comment - Dubai bond sale marks rehabilitation

A rising tide lifts all ships, even those laden with a pile of IOUs. Amid a marked rally of emerging market bonds Dubai’s government has once more returned to international debt markets, raising $500m and reaffirming its rehabilitation in the eyes of investors.

At the time of Dubai’s last sovereign bond sale in September — its first since rattling markets in late 2009 with the restructuring of state-owned conglomerate Dubai World — the five-year $500m issue was priced to yield 6.7 per cent and the $750m, 10-year bond was priced to yield 7.75 per cent.

Yet since then Dubai’s economic recovery has gathered pace, largely thanks to the emirate’s status as a perceived haven in a restive Arab region. This has boosted the local stock market, and lowered the cost of borrowing for Dubai.