The government of Dubai is set to launch a fresh borrowing programme worth $6.5 billion in its latest effort to consolidate its huge debt and further spend on infrastructure for the emirate's struggling economy.
The latest programme, due to be finalised in the next few days at the end of its roadshow, comes as the cost of insuring Dubai's debt falls towards a recent one-year low.
This brightens the prospect for the Dubai government which is in the middle of restructuring some of its $80 billion debt owned together with its state-owned firms.
Bankers, who attended the roadshows in Abu Dhabi and Dubai, told Reuters the government had launched a $4 billion euros ($6 billion) medium term note programme and a $2.5 billion Islamic bond, or sukuk, used for general corporate activities, including infrastructure.
"The meeting was full. They seem to be saying everything is going okay. These concerns (over Dubai's ability to restructure debt) seem to be ironed out," a senior banker who attended the meeting told Reuters on Sunday.
The Dubai government has about $19.7 billion of direct debt borrowing, one of the bankers said, citing the roadshow presentation, adding the funds would not be used for state-linked entities.
It will wrap up the roashow in London and Frankfurt on Tuesday after starting it in Hong Kong on Oct 22. A prospective international bond sale would be the first from the emirate in more than a year and comes after Dubai International Capital, an investment firm owned by the ruler of Dubai, launched earlier this month syndication for a $550 million loan.
Credit Default Swaps (CDS) prices for the five-year Dubai debt stood at 298.3 DUBA5YUSAC=MP at the end of Friday, close to a one-year low of 291 set last Tuesday.
"Compared to the past, the level of disclosure is more," said one of the bankers. "They also emphasised that as far as the Dubai government was concerned the UAE will back them and Dubai is an integral part of the UAE."
Dubai, one of the seven emirates in the country, propelled itself into the spotlight as a tourism hub during a six-year oil-fuelled boom, but the downturn rocked its foundations based on excess lending and a transient expatriate population.
Investors -- often starved of information in a region known for its lack of transparency -- are keen to see how Dubai is able to tap markets as its real estate sector slumps under the weight of the financial crisis.
The emirate has at least $4.5 billion to restructure over the next two months, including a $1 billion Islamic bond from the emirate's civil aviation department and the world's largest Islamic bond to date, a $3.5 billion issue, from property developer Nakheel. ($1=.6664 euros) (Edsiting by Mike Nesbit)
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