Dubai Civil Aviation Authority (DCAA) has repaid a $1bn sukuk (Islamic bond) that matured on 4 November.
The DCAA’s debt was the largest to reach maturity before government-owned real estate developer Nakheel’s $3.5bn sukuk requires repayment on 14 December.
Nakheel is an operating company of Dubai World, a holding company of businesses that the Dubai government either owns outright or in which it holds a stake.
Bankers close to the DCAA say the authority could issue a $1bn bond by the end of 2009.
DCAA has held talks with banks including the UK’s Standard Chartered Bank, Dubai Islamic Bank, Bank of America-Merrill Lynch, and Bank of Tokyo Mitsubishi, about the possible sukuk issue.
According to a Dubai-based banker, it is unclear where DCAA found the money to repay the existing sukuk.
Bankers assumed the DCAA would repay its debts after the Dubai government said the DCAA’s sukuk was government debt in Dubai’s October prospectus for its own $1.9bn sukuk.
On 29 October, the government completed the sukuk issue.