Investor confidence was bolstered this week by the forging of a deal between Dubai’s finance department and the UAE which will see the UAE purchase USD10bn in bonds from Dubai in order to provide the emirate with liquidity.
The global financial crisis has severely dented Dubai’s real estate sector leaving the emirate with a multi-billion dollar debt from expansion projects.
The UAE will invest USD10bn in Dubai’s five-year USD20bn bond programme, providing much needed liquidity for the emirate to insure itself against default. The loan carries a 4% coupon.
“This issuance will provide Dubai Government with the necessary liquidity to substitute the liquidity that has dried up globally in the last 12 months and accordingly meet all upcoming financial obligations. This programme will secure the necessary funding for Dubai to meet its financial obligations and continue its development programme,” said the Finance Ministry in a statement.
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