HSBC is looking at subscribing to the second tranche of Dubai's $20 billion (Dh73.4bn) bond programme, a senior bank official said.

The bank may use it for its investment portfolio, that is it will buy bonds and distribute them to its private banking customers or it may use it for its trading book, said John Coverdale, Group General Manager and Global Co-Head of Commercial Banking at HSBC.

"Yes, we are looking at them. We will make a decision according to the pricing and other different dynamics," Coverdale told Emirates Business.

He said the bond market is being freed up again, thanks to the upswing in consumer confidence over the last six months.

Dubai is expected to issue the second $10bn tranche before the year ends. The UAE Central Bank had subscribed to the first $10bn tranche.

Meanwhile, Dubai has begun selling bonds, apart from the $20bn programme. The emirate last week raised $1.93bn in its first Islamic bond sale, the biggest from the Gulf this year. It sold $1.25bn of dollar-denominated, five-year, fixed-rate Islamic bonds, or sukuk, priced to yield 6.39 per cent.

Another Dh2.5bn of local-currency floating-rate Islamic notes priced to yield 5.65 per cent. Dubai attracted more than $6.3bn in orders.

"A year ago, there was a lack of confidence and we have now seen that [bond market] free up," said Coverdale. "We have seen debt issuance, certainly in Asia Pacific, and also equity. There have been a lot of IPO issues in Hong Kong and China."

Trade finance is also seeing an upward trend as corporates appetite to invest in international markets increase. Dewa for one – which in April raised $1bn in its first ECA-backed deal – is planning to have more ECA-backed deals. The state utility firm is looking at nearly doubling the current amount in the next few months to fuel its expansion plans.

Simon Johnson, Regional Head of Commercial Banking at HSBC Middle East, said: "I can confirm that we are seeing an increase in ECA-backed facilities and that there are number of transactions we have done very recently."

He said customers are "sticking" to their surplus cash at the moment while eyeing opportunities.

"We see confidence returning," Johnson said. "Customers are telling me that they see opportunities to make acquisitions and to invest in the region and internationally as confidence begins to turn around."

Essam Al Tamimi, Founder and Senior Partner of Al Tamimi, said: "The M&A pipeline in the region is becoming more active by the day.

"Not all our work today is destructive like suing people and companies. A lot of our work involves mergers and acquisitions.

"There are very good deals out there and people are acquiring business across the Gulf. There are lot of inter-Gulf acquisitions happening as we speak and it kicked off at an unbelievable scale after Ramadan."

Business confidence in the Gulf Arab region has risen to its highest level since October 2008 with companies anticipating higher revenues and profit margins, according to an HSBC survey released on October 21.

The survey, which was taken in late September, revealed 54 per cent of participants expected business to improve overall, up from 41 per cent previously.

The index, which gauges the optimism of businesses in Saudi Arabia, the UAE, Qatar and three other Gulf states, recorded a 7.3 per cent gain quarter on quarter.

The UAE ranked number three on HSBC's Trade Confidence Index, released on October 14. It was one of the top three most confident nations in the world on trade activity and growth, scoring 118 points, up three per cent from the previous quarter. China at 121 and Indonesia at 120 took the top two spots.

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