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UPDATE 1-Dubai's Dewa says $1.5 bln April bond not govt backed
March 10, 2010 / 11:23 AM / 8 years ago

UPDATE 1-Dubai's Dewa says $1.5 bln April bond not govt backed

* Lack of guarantee may deter investor appetite

* Chairman says proceeds to be used for project funding

* Says executing 30 bln dhs ($8.17 bln) in projects (Adds detail, background)

DUBAI, March 10 (Reuters) - Dubai-owned utility Dewa’s $1.5 billion bond issue in early April will carry no government guarantee, which is likely to limit investor interest while Dubai state enterprises are struggling with a debt crisis.

Dewa Chief Executive Saeed Mohammed al-Tayer revealed the absence of a guarantee during an interview on Al Arabiya television on Wednesday.

Dubai Electricity and Water Authority’s (DEWA) [DEWATF.UL] plan to issue bonds marks Dubai’s first dip into international capital markets since the emirate’s debt problems shocked the markets in November.

Dewa said on Tuesday it planned a roadshow this month for the bond issuance, which was abandoned after state-owned conglomerate Dubai World said in November it would restructure about $26 billion of its debts. [ID:nLDE6281AQ]

The Dubai World debt crisis sent shockwaves through international markets, raising concerns about credit quality in the emirate, and hiked the pricing burden on issuers.

The state-owned firm is expected to propose a plan to creditors within weeks.

Despite the potential difficulties, Tayer said he expected a good response for the bond, but acknowledged Dewa might have to tap alternative financing methods.

“The authority has other options ... Our strategy is flexible and the options are many,” he said without elaborating.

The utility had already secured 5 billion dirhams ($1.36 billion) from export credit agencies in a “short period of time”, he added.

Tayer said proceeds from the bond issue would be used to finance projects.

It has about 30 billion dirhams worth of projects in the works, Tayer said on Wednesday. “We have projects under execution for around 30 billion dirhams, with 80 percent almost completed,” he said. (Reporting by Tamara Walid; editing by John Irish and Will Waterman) ($1=3.672 dirhams)

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