Amidst crisis, Dubai raises $5 bn from bonds

The embattled Dubai government has successfully raised a further $5 billion from two Abu Dhabi banks as part of its long-term bond programme, signalling that investors are still showing trust in the oil-rich city-state.

The Dubai government has successfully raised a further $5 billion from two Abu Dhabi banks on Wednesday as part of its $20 billion long-term bond programme launched at the beginning of 2009.

Quoting Al Hilal Bank chief executive Mohammad J Berro, Gulf News said, "$500 million was released to the Dubai government by Al Hilal Bank on Wednesday. The remainder will follow," he added.

Berro further said "we have subscribed to sukuk (Islamic bonds) worth $2.5 billion because Dubai has come strongly out of the financial crisis. The tenure is five years and the coupon rate is four per cent, which is a good return."

This fund raising is despite the fact that investors are concerned over the huge debt burden of Dubai World, an investment company that manages and supervises a portfolio of businesses and projects for the Dubai government.

On November 26, Dubai World said it would ask creditors for a "standstill" on paying back its $60 billion debt until at least May.

Citing Al Mal Capital fund manager, the Gulf News said "the market expects Dubai to raise another $5 billion soon which will take care of some of Dubai's debt and lift the confidence of the investors".