Amid fears that it is already overly indebted, the image-conscious Dubai government has embarked on its largest bond programme ever. The local-currency bonds will be used to fund improvements to Dubai’s choked transport infrastructure, in particular through a new metro and international mega-airport.
The Dubai metro is getting some funds by selling the names of its stops and lines to corporations. Local (mostly government-owned or backed) brands might be keener on the offer. But the prospect is nevertheless set for a journey from McDonald’s to Ford, via Gap.
The plain-vanilla bonds are perhaps less revolutionary in structure. A first tranche of $1.8 billion was issued in mid April, consisting of $700 million in five-year, fixed-rate notes with a coupon of 4.25% and $1.1 billion of floating-rate notes priced at 0.5% over the three-month local inter-bank rate. A banker close to the deal tells Euromoney that a second tranche will cover the rest of the $4 billion programme, unless demand is insufficient, in which case a third tranche might be necessary.
Standard Chartered and local bank Emirates NBD are arranging the deals. The debt comes as part of a transport infrastructure investment programme of $14.3
