| Kippreport.com

Dubai assets on the line

September 13, 2010 2:48 by Reuters

Dubai officials met with fixed income investors in Asia last month, seen as a sign a bond issue could be on the cards.

“They could probably do $500 million to a billion, much beyond that will be tricky,” said a fixed income investor. “Asian private bank money is still quite hungry for yield. A seven-year piece of Dubai paper with a nice yield to it would probably do quite well.”

The government’s utility company DEWA attracted $11.5 billion in bids for a $1 billion bond in April but had to pay a generous 1.25 percent premium to the underlying sovereign. The yield on Dubai’s paper maturing in 2014 has come down to 6.8 percent from a high of 10 percent in February.

Alternatively, Dubai may have to approach neighbours like Saudi Arabia and Qatar with a debt issue. Abu Dhabi would only be on hand again in the worst-case scenario, analysts say.

“Maybe $500 million each from Saudi, Kuwait and Qatar would not really move the needle (there),” the fixed-income investor said.

Analysts, however, say that could carry risks, making asset sales and bond issues the more likely way forward.

“Does Dubai want to be seen as a sort of Lebanon that needs to go cup in hand around the region trying to raise concessionary money?” the investor said.

(By Martin Dokoupil. Additional reporting by Martina Fuchs; Editing by Susan Fenton)

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