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UAE Bonds Attract International Interest

UAE : 22 October 2010

International investors are drawn to the UAE in increasing numbers after the recent and successful issuance of bonds, according to a leading banker.

Didier Duret, chief investment officer for ABN Amro Bank, stated that an increasing amount of interest is being shown in the UAE bond market since the recent bond issues.

Investors are searching for yield and income at the same time that a large supply of bonds set to provide that yield have been issued, stated Duret who arrived in Dubai to launch ABN Amro’s Economic Outlook and fourth quarter strategy.

Interest is being shown from Asia and Latin America especially, with a collection of major clients centered in Indonesia, Singapore and Hong Kong.

Two bonds have been issued in Dubai lately.  The Dubai government issued a sovereign bond worth $1.25 billion which was followed by the issue of a utility bond worth $2 billion.

Last week saw the Dubai Electricity and Water Authority sell $2 billion in a dual-tranche bond.  Included were $500 million in shorter six year bonds and $1.5 million in extended ten year bonds, as stated by those familiar with the sale.

In September $1.25 million in government bonds were sold in Dubai, including $500 million in shorter five year bonds and $750 million in extended ten year bonds.

Duret stated that GDP growth for the UAE is forecasted to fall between 3.5 and 4 per cent for this year.  Growth across the MENA (Middle East and North Africa) region should land at 4 per cent for 2010.  MENA is well known for the oil reserves located there.  Not bullish, Duret stated that oil prices falling between 75 and 80 would be comfortable for those involved in the bonds.

Duret spoke about the global economy, commodities in general including oil and others, the restructure of debt, inflation and deflation as well as opportunities and risks in the current economic climate that still hovers in uncertainty.

Markets will see revitalization as further evidence of recovery shows itself.  Duret noted that since market gains are unpredictable, a balance of bonds and equities along with alternative investments will provide the optimum portfolio to ride out the slowdown and take advantage of the recoveries.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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