Dubai-government owned Dubai Electricity and Water Authority (DEWA) successfully accessed the international debt capital markets raising a total of US$ 2 billion, split across two tranches of US$500 mln maturing in October 2016 at the initial price of 6.375 %, and US$1.5 billion maturing in October 2020 at the initial price of 7.375 %. The offering was a drawdown of the company's existing US$3bn Global Medium Term Note Programme ("GMTN").
This transaction is DEWA’s second foray into the US$ debt capital markets in 2010 and was met with material demand from the international fixed income community. The proceeds of the fund raising exercise are intended to support its capital expenditure and other investment plans.
Citi, Credit Agricole Corporate & Investment Bank, the National Bank of Abu Dhabi, Standard Chartered Bank and The Royal Bank of Scotland plc acted as joint-bookrunners on the offering.
30% of the offering was placed with US investors, 38% in Europe, while the remainder was placed in Asia (16%) and the Middle East (16%).
October 15, 2010
Analysis and Forecast: Decreasing Risk
This is generally very good news for Dubai as it confirms yet again return of confidence of the international investors. Although the rates that are offered are relatively high, DEWA’s, and by implication Dubai government’s success, in accessing the international bond market will lead to further boosting of confidence about the prospects for Dubai’s recovery.
Although Dubai needs to demonstrate its commitment to transparency and separation of commercial and sovereign debt to build on the gradually returning confidence, the fact that DEWA has now raised cash and successfully accessed the international market is a very good development.