Dubai Electricity Spreads Widen on Slump Concerns: Arab Credit - Bloomberg

Investors in Dubai Electricity & Water Authority’s bonds are demanding close to the highest premium in six months to hold the utility’s debt over that of Abu Dhabi National Energy Co. (TAQA) as they seek safer assets.

The spread between bonds of DEWA, as Dubai’s government- owned utility is known, and those of the neighboring Abu Dhabi utility, known as Taqa, widened to 281 today from this year’s low of 199 basis points on July 20. The yield on DEWA’s 8.5 percent bond maturing in April 2015 rose 61 basis points to 5.44 percent in the same period and Taqa’s 4.75 percent securities due September 2014 fell 22 basis points to 2.64 percent, according to data compiled by Bloomberg.

Dubai’s government and state-linked bonds are suffering on concern a renewed global economic slump may hurt the ability of the United Arab Emirates second-largest sheikhdom to repay more than $100 billion in debt. Business confidence in the country slipped to a 15-month low in August, HSBC Holdings Plc said in its monthly Purchasing Managers Index survey Sept. 7.

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