Investment Corporation of Dubai expected to issue dollar bond this month

Investment Corporation of Dubai (ICD), the Dubai government’s main investment arm, is likely to issue its planned U.S. dollar-denominated bond this month but has yet to decide whether it will be a sukuk or a conventional bond, sources said on Monday.

The bond will be benchmark-sized, which traditionally means upwards of $500m, and ICD has picked banks to arrange the issue, the sources familiar with the matter told Reuters, speaking on condition of anonymity because the information is private.

An ICD spokeswoman did not respond to a request for comment via email.

The company, which holds stakes in Emirates Airline and Emirates NBD, has selected Citi, Emirates NBD, HSBC, JP Morgan, NBAD and Standard Chartered to arrange the upcoming debt issuance. Dubai Islamic Bank could also be involved should the deal be a sukuk rather than a conventional transaction, one of the sources said.

The issue is expected to be one of a number of dollar bond issues out of the Gulf this year as banks, companies and governments plan debt issues to improve their liquidity and to replenish their coffers, strained by lower oil prices.

Banks are likely to issue their bonds before companies and governments, sources said. Lenders such as Bahrain’s Gulf International Bank, Kuwait’s Warba Bank and UAE’s Dubai Islamic Bank have either already lined up arrangers for their planned debt sales or have approached banks to prepare their bonds.

ICD sold a maiden U.S. dollar bond in 2014, when it raised $1bn in debt split between a $700m sukuk and a $300m conventional bond.

Citi, Dubai Islamic Bank, Emirates NBD, HSBC and Standard Chartered arranged the 2014 bond.