Dewa Pricing Pressures Dubai World Debt Talks

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Pricing of a benchmark bond by Dubai Electricity & Water Authority is putting Dubai World's negotiations to reschedule almost $24 billion of debt under pressure, bankers familiar with the matter said.

The utility, or Dewa, earlier this month sold a $1 billion bond to yield 1.05 percentage point over comparable Dubai sovereign debt. The company will pay a semiannual coupon at a rate of 8.5% to bond holders until the instrument reaches maturity in 2015.

The interest rate for the Dewa bond is much better than Dubai World's recent offer to creditors of the conglomerate and of Nakheel, its property subsidiary. Dubai World had offered a 1% interest rate on some of its outstanding debt in a restructuring proposal to 97 creditors now being considered by banks, according to bankers aware of the talks.