The Abu Dhabi Department of Finance and UAE Central Bank of the UAE on Sunday signed two separate agreements with Dubai Government to refinance a total of $20 billion in loans and bonds.
While the Government of Abu Dhabi has agreed refinance the $10 billion loan, the UAE Central Bank has also signed an agreement to extend the tenure of a $10 billion bond issued by Dubai Government in 2009, reported Gulf News on Sunday.
In both cases, the new tenure is set at five years renewable, with a fixed interest rate of 1 per cent.
Dubai borrowed the money five years ago to help the government and its government-related entities (GREs) to meet some of the debt obligations in the face of the global financial crisis. The refinancing comes ahead of its maturity this year.
The $10 billion debt from the central bank was in the form of bonds and was due to mature this month. The previous bonds carried a 4 per cent coupon while the refinancing has been done at a fixed rate of 1 per cent.
The other $10 billion loans provided through National Bank of Abu Dhabi and Al Hilal Bank, was due to mature later this year.
The widely anticipated debt rollover agreements come at a time when the Dubai economy led by trade, tourism and property sectors have made major recovery in recent months.
The rollover is expected to enable Dubai to continue to spend on infrastructure, leading up to the hosting of Expo 2020.