Dubai has unveiled a fund-raising initiative for $6.5 billion (Dh23.86bn) through a combination of $4bn euro medium-term note (EMTN) and a $2.5bn sukuk issue, the latter being sold through a new Cayman Islands entity called Dubai DOF Sukuk, according to the prospectus made available to prospective investors.

The Dubai Government has announced that the new EMTN debt may be listed on the London Stock Exchange (LSE) and Dubai Financial Market (DFM).

Lead arrangers for the paper are Mitsubishi UFJ Securities International, Standard Chartered Bank and UBS Investment Bank.

Officials, who addressed investors in Dubai yesterday, said lead managers for the sukuk issue are Dubai Islamic Bank (DIB), Mitsubishi UFJ, Standard Chartered and UBS Investment Bank.

According to investors who attended the roadshow in Dubai yesterday, the response to the event was good. "I am sure the issue will get oversubscribed as there are eager investors who want to pick up a portion of the Dubai debt, especially because I am sure it will be issued at a comfortable price," said a top official at the fixed-income department of a foreign bank.

He said the documents he received from the issuer have noted the aggregate direct debt of the Dubai Government is just more than $19bn.

"The fact that the issue is not rated is unlikely to have any noticeable negative impact on the pricing or subscription," said another investor attending the roadshow.

A spokesperson for the Dubai's Department of Finance explained that though the process for the rating of Dubai had started, it has been put on hold since the recession set in.

"The rating exercise will not be taken forward this year. Maybe, we will see it going through some time next year. So this issue will be concluded in the absence of a rating.

"The success of this issue is likely to prompt other entities, especially banks from Dubai, to consider raising funds through bond issues – both conventional and Islamic.

The past few months saw the Abu Dhabi Government, as well as entities related to the government such as Aldar, Taqa, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Tourism Development and Investment Company, and others come up with bond issues, mostly dollar-denominated global issues.

According to Hassan Jarrar, Managing Director, Country Head of Origination and Client Coverage UAE, Standard Chartered Bank, more than 50 per cent of those issues were bought by international investors – from Europe, the United States and Asia.

In February this year, $10bn worth bonds were placed with Central Bank at a fixed interest rate of 4.5 per cent, as part of the $20bn programme.

The Department of Finance officials made it clear that part of the proceeds from that issue has been already been disbursed to Dubai Government-related entities at commercial terms and rates.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.