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Dubai sukuk issue within days

difc|By TAP Staff|The much-awaited Dubai benchmark government sukuk is expected soon. The issue, which will have a life span of 15 years, is initially expected to be priced between 5 and 5.125 basis points and total at least $500 million, according to lead managers.

The banks arranging the transaction are Dubai Islamic Bank , Emirates NBD, HSBC, National Bank of Abu Dhabi and Standard Chartered.

Dubai was one of the first bond issuers from the Gulf in 2013 with a dual tranche 10-year sukuk and 30-year conventional note.

There have been rumours ever since the World Expo announcement about a possible sukuk issue.  One debt syndicate official at a local bank had said as early as last summer that the emirate might consider refinancing some of its debt pile by returning to debt markets.

Last year, Dubai authorities estimated total financing costs at $8.4 billion (8.9 percent of gross domestic product) and the government committed to fully funding capital needs of $6.8 billion, analysts at Bank of America Merrill Lynch said in a note in November 2013.

Dubai and its state-linked companies still have to deal with a number of debt maturities in coming years, a legacy of the 2008 crisis and the subsequent property crash. The emirate will have to tread carefully not to add too much to the debt pile, said bankers.

“I think there will be some new issuance, but they probably won’t go crazy,” a second DCM banker based in Dubai said.

Among the debts of the Dubai government and related entities, Dubai has $20 billion coming due in November 2014 to Abu Dhabi and its banks.