DUBAI: The Government of Dubai, acting through the Department of Finance, on Wednesday, opened the first issue of the year in the Mena capital markets with a dual-tranche landmark transaction, which has successfully raised $1.25 billion across a 10-year sukuk and a first ever 30-year conventional issue.

The aggregate order book was over twelve times oversubscribed demonstrating tremendous investor appetite. The well-planned and swift intra-day execution took advantage of the positive market environment which led to a quick build of a large and high-quality order book for a 10-year sukuk.

This strong early momentum for the sukuk and investor interest in the longer end of the curve, in turn led to the addition of a 30-year tranche on a reverse enquiry basis.

Abdurrahman Al Saleh, director-general, Department of Finance said, “We are extremely happy to receive such an overwhelming response to the transaction. The sukuk compliments the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the UAE Vice President and Prime Minister of the UAE and Ruler of Dubai to establish Dubai as the Global Capital of Islamic finance.”

The $750m 10-year sukuk was priced at a profit rate of 3.875 per cent, while the $500mn 30-year conventional was priced at 5.250 per cent coupon. The issuances have set new benchmarks for Dubai with the 10 year re-pricing the existing yield curve, while the 30 year established a new reference point on Dubai’s credit curve, as the first ever unrated USD Reg S trade globally.

This has now set the stage for other Dubai entities to raise longer-term financing. These issuances for a part of the updated Trust Certificate Issuance Programme and the Euro Medium Term Note Programme, which were established in October 2009 and April 2008 respectively. Proceeds of the issuances will be used for general budgetary purposes and refinancing.