Dubai Electricity and Water Authority (DEWA) postponed plans to issue a bond last November when conglomerate Dubai World said it would delay repaying $26 billion in debt.
Bankers at the road show in the United Arab Emirates said DEWA could expect a warm if pricey response, given demand for utility paper from the Gulf region. One banker said DEWA was looking to raise about $1.5 billion as a first tranche.
"If there is one company from Dubai that can raise funds, it is this one," said the banker who attended the meeting but asked not to be identified.
"DEWA will be able to raise the money but they'll really have to pay - at least 8 percent they'll have to pay."
DEWA is on the road to market its proposed $3 billion Global Medium Term Notes (GMTN) program, rated BBB- by Fitch Ratings on April 1. The road show comes after Dubai unveiled a $9.5 billion rescue plan for Dubai World last month.
In March, DEWA's chairman said the company aimed to complete a $1.5 billion bond issue in early April.
"The initial response seems good. Notwithstanding Dubai and all that happened," said another banker, who attended the meeting in Abu Dhabi.
Bonds issued under the MTN program will not carry a Dubai government guarantee, according to the prospectus. Dewa's debt at the end of February stood at 24.24 billion dirhams ($6.6 billion), of which 2.19 billion dirhams is due in 2010, the prospectus said.
Proceeds from the bond sale will be used for general corporate purposes, and the notes will be listed on the London Stock Exchange.
"It is a litmus test, this is a key deal," said Chavan Bhogaita, head of credit research at National Bank of Abu Dhabi.
"It is significant because it is the first deal out of Dubai after the debt standstill. (It will show) demand that Dubai can generate worldwide and what cost of funding investors demand from Dubai."
Citigroup, Standard Chartered, the Royal Bank of Scotland and NBAD are mandated banks.
The addition of NBAD to the group is a sign that Dubai's wealthy neighbor Abu Dhabi is giving DEWA tacit backing. NBAD is majority owned by the Abu Dhabi government, which sprang to Dubai World's rescue in December.
DEWA, the sole provider of Dubai's electricity and water needs, has ambitious - and expensive -- expansion plans. But its monopoly market position makes it attractive for investors.
In March, Chief Executive Saeed Mohammed Al Tayer said that DEWA has about 30 billion UAE dirhams ($8.17 billion) of projects in the works, with 80 percent almost completed.
DEWA will meet with potential investors in Asia, Europe and the United States later this week and next for the 144a issue, opening up the offer to qualified institutional investors in the US
"It will be interesting to see how much they raise from the 144a issue in the US Even if it's 5 to 10 percent it'll be seen as good," said a Gulf-based banker.
DEWA last tapped the bond market in 2008 with a combined issue of 3.2 billion dirhams, including a 450 million dirham Islamic bond, or sukuk.
A number of quasi-sovereign corporate and financial bond issues from the Gulf are expected to come to market in the second quarter, as the pipeline begins to open up.
