Dubai to launch sovereign bond of up to $1.5 billion

Dubai has mandated four banks for a sovereign bond issue of up to $1.5 billion. The bond may be launched  this week, two sources familiar with the matter told Reuters.

The emirate is tapping debt markets again nearly a year after it issued a $500 million bond.

It selected HSBC Holdings, Citigroup Inc, Dubai Islamic Bank and National Bank of Abu Dhabi for the issue, said the sources who spoke on condition of anonymity.

“The books will open soon, probably tomorrow or the day after,” said one source familiar with the matter.

The government is mulling a dual-tranche dated issue which may be an Islamic bond, or sukuk, said one of the sources. The inclusion of Dubai Islamic Bank on the deal indicates the government will likely opt for an Islamic structure.

Dubai set up a $4 billion medium-term notes program in 2008 which it raised to $5 billion last year. It recently updated its bond prospectus.

The emirate last tapped debt markets in 2011 when it issued the $500 million, 10-year bond with a five-year put option, allowing investors to redeem their investment ahead of maturity at full value.

That bond was last bid at near 103 levels, according to Thomson Reuters data, to yield 5.2 percent.

Helped by an economic revival in trade and tourism and its safe-haven status amid the Arab Spring civil uprisings, Dubai is recovering from the depths of its debt crisis.

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