Dubai in drive to raise $10bn bond tranche

Dubai said yesterday it had begun the process of raising a second $10bn tranche of a $20bn sovereign bond programme and was setting up a new fund to manage the proceeds.

The news was intended to reassure investors that the city state, which has been hit hard by the economic crisis , is actively seeking to manage its huge debt problems. The government and government-related entities are saddled with at least $80bn of debts .

The emirate, which has established itself as the business hub for the oil-rich Gulf, managed to avert a potential debt meltdown this year when the federal central bank stepped in to buy the first $10bn tranche in February.