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Investment Corp Said to Pay 2.15 Percentage Point Spread on Loan

Investment Corp. of Dubai, the emirate’s main state-owned holding company, will pay 2.15 percentage points over Libor to raise $2 billion in a syndicated loan, a banker familiar with the deal said.

Lenders will be paid additional fees depending on the size of their commitment, according to the banker, who asked not to be identified because the information is private. Reuters reported the story on March 21. A spokeswoman for ICD could not be reached for a comment.

The five-year syndicated loan includes both conventional and Islamic portions, ICD said March 18. The proceeds will be used to repay the $2 billion, five-year portion of a $6 billion borrowing from August 2008, it said. The remaining $4 billion was settled in August 2011.

Dubai’s borrowing costs have dropped as the city’s tourism, hotel and transport industries recover from a property market crash in 2008 that sent home prices plunging. The emirate’s government sold $750 million of 10-year Islamic bonds in January at a yield of 3.875 percent, compared with a rate of 6.45 percent for similar-maturity notes issued in April.

The Dubai government’s $500 million of 6.7 percent bonds due October 2015 traded at a Z-spread of 190 basis points, or 1.9 percentage points over the benchmark midswap rate, according to data compiled by Bloomberg. Its $750 million of 7.75 percent bonds due October 2020 traded at a spread of 246 basis points.

Abu Dhabi Commercial Bank PJSC (ADCB), Citigroup Inc. (C), Commercial Bank of Dubai PSC (CBD), Emirates NBD PJSC (EMIRATES) and HSBC Holdings Plc (HSBA) will help arrange the conventional funding, while Abu Dhabi Islamic Bank (ADIB) PJSC, Dubai Islamic Bank PJSC (DIB) and Standard Chartered Plc (STAN) will oversee the Shariah-compliant segment, ICD said.

ICD was set up in May 2006 and holds stakes in more than 30 companies, including Emirates, the world’s biggest airline by international passenger traffic, and Emirates NBD, the United Arab Emirates’ biggest bank by assets.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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