The Dubai government and its entities are facing debts of around $80 billion, and authorities have assured investors that the emirate will meet its financial obligations.
November 11, 2009 3:32 by kippreport
Despite the doubters, Dubai’s authorities have said that they are confident that the city is well-equipped to repay its debts in time.
Last month, the city raised $1.93 billion from the biggest sale of Islamic bonds in the region this year. The bonds consisted of two portions: a $1.25 billion dollar-denominated bond and an AED2.5 billion ($680.8 million) local currency note. The sukuk was oversubscribed and saw orders of around $6.4 billion. The sale is part of a $6.5 billion bond plan that the Dubai government launched in October, which consists of $4 billion Euro medium term notes and a $2.5 billion Islamic bond program.
In February this year, Dubai launched a $20 billion long-term bond program to repay its debts. The first tranche of $10 billion was bought by the UAE central bank as five-year bonds, and a part of the amount raised was distributed to state-owned companies like Nakheel.
Earlier this week, Sheikh Mohammed confirmed that the second $10 billion would also get subscribers. “The second tranche of the bond program will receive subscribers and will be used to settle Dubai’s obligations in future,” he said.
Last month, officials from Dubai’s Department of Finance also went on a roadshow to meet potential investors in Asia and Europe.