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DEWA bonds issue draws hefty demand

October 15, 2010 | www.gulf-daily-news.com

DUBAI: State-owned Dubai Electricity and Water Authority (DEWA) drew hefty demand of $17 billion for a $2bn two-tranche bond it launched yesterday, helped by juicy yields and improved sentiment towards the Gulf emirate.

DEWA's six and 10-year bonds are its second issue this year and follow last month's successful offering by its owner, the Dubai government.

Dubai's monopoly supplier of electricity and water launched a $500 million six-year tranche at a yield of 6.375 per cent and a $1.5bn 10-year tranche at 7.375pc, in line with earlier guidance, lead management and market sources said.

Yesterday's initial guidance was at 6.5 to 6.625pc for the six-year tranche and 7.5 to 7.625pc for the 10-year tranche.

"It is a good yield from the investor perspective," said Commerzbank head of emerging markets research Michael Ganske.

"It could have been a slightly lower yield ... it is very hard to price, because there is still this memories effect," he said. "From this side it is a tough call what is a fair yield on such an issue."

Analysts expected solid demand for DEWA's paper after short-term debt concerns eased following Dubai World's $24.9bn debt restructuring deal last month, as well as global appetite for riskier, higher-yielding assets.

In April, 'Ba2'-rated DEWA was the first Dubai name to unfreeze the market locked by Dubai's debt woes, attracting $11.5bn in bids for a $1bn bond, despite a high 1.25pc premium to the underlying sovereign.

Dubai sold a $1.25bn bond last month, its first since the debt crisis last year, drawing demand of over $5bn.

The unrated sovereign issue was priced at a yield of 6.7pc on the $500m five-year tranche and 7.75pc for the $750m 10-year tenor.

The yield on DEWA's five-year paper stood at 6.366pc yesterday, down from Wednesday's close of 6.389pc and May's high of 8.688pc. The comparable Dubai bond was at 6.283pc yesterday.

Issue: DEWA, 6.375% 21oct2016, USD

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redeemedUnited Arab Emirates10/21/2016500,000,000 USDWithdrawn/-/-

Company: DEWA

Full company nameDubai Electricity and Water Authority
Country of riskUnited Arab Emirates
Country of registrationUnited Arab Emirates


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