Dubai government repays more than $1 billion worth of sukuk

The settlement of obligations reflects emirate's 'strong financial position', Public Debt Management Office says

The Dubai skyline. The sukuk played a vital role in financing infrastructure projects. Reem Mohammed / The National

The Dubai government has repaid Dh3.85 billion ($1 billion) worth of sukuk (trust certificates), the Public Debt Management Office of Dubai’s Department of Finance said on Monday.

The amount includes $750 million (Dh2.75 billion) of sukuk which was issued on January 30, 2013, it said in a statement.

The government also prepaid an additional $300 million (approximately Dh1.1 billion) of sukuk through an early redemption, nearly four years ahead of its maturity in November 2026, the statement said.

The Dubai government has fully redeemed the sukuk through the settlement of payable amounts, including accrued profits, to the investors, it said.

“These redemptions align with the DMO's aim of deleveraging in the short term, notably lowering the Dubai government's public debt levels,” said Rashid Al Falasi, chief executive officer of the DMO.

The strong performance of public revenues in the 2022 fiscal year, resulting from the overall economic growth of the emirate, contributed to the government's efforts to further raise the efficiency of managing the public debt portfolio, “particularly by reducing financial obligations and related costs”, in accordance DMO’s Public Debt Sustainability Strategy, Mr Al Falasi said.

Dubai's economy has rebounded strongly from the pandemic-driven slowdown.

It expanded 4.6 per cent on an annual basis in the first nine months of 2022, according to the Dubai Statistics Centre.

Emirates NBD estimates Dubai's full-year 2022 growth at 5 per cent and expects the emirate’s GDP to grow by 3.5 per cent in 2023.

Business activity in Dubai's non-oil private sector economy also remained robust in January, expanding for the ninth month in a row as consumer demand improved along with employment in the emirate.

The seasonally adjusted S&P Global purchasing managers' index reading in January stood at 54.5, above the neutral 50 mark that separates economic expansion from contraction.

The emirate is undertaking several multibillion-dollar infrastructure and other schemes across sectors as it pursues the Dubai 2040 Urban Master Plan.

It has also announced the D33 strategy, which aims to double the size of Dubai’s economy with a target of Dh32 trillion over the next decade.

The sukuk played a vital role in financing infrastructure projects, primarily the expansion of the Dubai International Airport, the statement said.

The Dubai government's commitment to the timely settlement of financial obligations and the willingness to prepay such obligations before its due date reflects its strong financial position, said Abdulrahman Al Saleh, the DOF’s director general.

The DMO was established last year to regulate the public debt of the Dubai government.