Feb. 19 (Bloomberg) -- Dubai Electricity & Water Authority plans to raise as much as $1 billion from the sale of Islamic bonds this month to refinance debt maturing in June, Chief Executive Officer Saeed Al Tayer said.
The state-owned utility, known as Dewa, mandated Royal Bank of Scotland Group Plc, Citigroup Inc., Standard Chartered Plc, Abu Dhabi Islamic Bank PJSC, Emirates NBD Capital Ltd. and Dubai Islamic Bank PJSC, to help manage the sale, Al Tayer said. Meetings with potential investors will be held in London and Asia next week, he said.
“We’re going for the cheapest option and sukuk is the cheapest now,” Al Tayer told reporters in Dubai today.
Issuers in Dubai are tapping the debt market after borrowing costs tumbled in the past year. Dewa last sold bonds in October 2010, when it raised $2 billion from the sale of six- year and 10-year securities at coupons of 6.375 percent and 7.375 percent. The yields were at 2.78 percent and 4.01 percent respectively at 12:15 p.m. in Dubai, according to data compiled by Bloomberg. The yield on the 10-year bond has tumbled 2.83 percentage points in the past year.
Dewa has a flexible funding strategy and may need to raise more funds for projects through the year, Al Tayer said.
--Editors: Peter Branton, Claudia Maedler