Dubai Civil Aviation may Issue Bond to Repay Debt.

Summary: DUBAI u Dubai Civil Aviation Authority may issue bonds to refinance $1 billion in debt maturing next month, two bankers familiar with the transaction said. Dubai Civil Aviation hired UBS AG, Dubai Islamic Bank, Standard Chartered Plc and Bank of Tokyo-Mitsubishi UFJ Ltd. to manage the Islamic and conventional bond sale, according to the bankers who declined to be identified because details of the C deal are private.

The state-owned company raised $1 billion in 2004 through Dubai Global Sukuk FZCO. The Islamic bonds, also known as sukuk, mature on November. 4. Aa The new issue may signal the return of Dubai state-owned companies to the public debt market after the real-estate slump caused by the global credit crisis dried up funding.

"The market is getting more comfortable with Dubai credit," said Dubai-based Jeffrey Meyers, head of fixed-income sales at Newedge Group. The news related to a "new fund injection from Abu Dhabi and officials' comments about Dubai's ability to pay its debt have helped a lot in improving confidence levels."

Dubai Debt

The emirate needs to repay $6.8 billion in debt during the fourth-quarter, including $3.52 billion by Nakheel PJSC, according to Deutsche Bank AG.

Dubai Civil Aviation's floating-rate note was trading close to par value on Oct. 16, rebounding from 92.5 cents on a dollar on Feb. 11. Dubai's credit default swaps protecting five-year bonds from default have fallen 70 per cent since reaching their highest in at least two years in February. A decline signals improved perception of credit quality. The swaps have dropped 2 per cent this month. Dubai borrowed $10 billion as part of a $20 billion bond programme by selling debt to the UAEs' central bank in February to help state-related companies raise cash amid C the credit crunch.

Dubai Electricity & Water Authority, the Gulf emirate's state-run utility known as Dewa, raised $1 billion in June last year, while Dubai Holding Commercial Operations Group LLC sold bonds worth 250 million Swiss francs during the same month. The bond sales were among the last from the emirate before the credit crisis. --

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