Dubai weighs return to global debt markets

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    DUBAI- The government of Dubai has held talks with banks about a potential issue of US dollar-denominated bonds, two sources familiar with the matter said, in what would be its first international debt sale since 2013.

    A potential deal is likely to see investors pour money into the notes, as global buyers seek high-yielding assets in a low-rate environment. The Dubai government had raised $1.25 billion in 2013 through Islamic and conventional bonds.

    Such a deal would come at a delicate time for Dubai, where the economy last year grew at the slowest pace since a contraction in 2009, when it was hobbled by a debt crisis.

    The Dubai government media office did not immediately respond to a request for comment.

    Dubai, which has forecast a budget deficit of 5.8 billion dirhams ($1.58 billion) this year, has had talks with banks over the past few weeks and is considering issuing bonds which would be used for budgetary purposes, said the sources.

    The government has not sent out official requests for proposals to banks to arrange the issue, which would have a maturity of at least 10 years, they added.

    S&P Global said in a recent report that Dubai – which is not rated – will see its economy rebound to grow 2.4 percent this year from 1.94 percent last year, but it cautioned against the high level of debt of state-related entities, estimated at $59 billion, or equivalent to 52 percent of GDP in 2018.

    The Dubai government’s own debt is estimated at $65 billion, 56 percent of GDP, S&P said. – Reuters