Abu Dubai bank aid to Dubai still outstanding

Abu Dhabi government-owned Al-Hilal Bank has still only subscribed to $500m of a $5bn bond issued by Dubai in November, but will take it up in the future, its chief executive said on Tuesday.

Al Hilal Bank and National Bank of Abu Dhabi jointly subscribed to Dubai's $5bn bond in November, on the same day that indebted state-conglomerate Dubai World said it would request a debt standstill.

"We have done $500m out of the $2.5bn," Mohamed Berro told Reuters in an interview. "The remaining $2bn will come in the future. We have not subscribed to it yet."

Market volatility surrounding Dubai's debt crisis has raised concerns but Berro, whose bank is owned by the Abu Dhabi Investment Council, said he expects clarity soon.

"The whole market has lots of questions, not just Dubai, which we are analysing to find the exact answer," he said, adding that 2009 had some "ambiguity".

"We still have some unknowns happening this year, (I) hope this is the last year." he said.

The $5 billion bond, which has a maturity of five years and pays 4 percent interest, is part of a $20bn sovereign bond programme launched by Dubai last year.

The UAE central bank took up the first $10bn tranche in February.

The Abu Dhabi government took up $5bn in December, in a last-minute bailout that helped Dubai avert default on an Islamic bond issued by Dubai World property unit Nakheel.

Dubai said in November the banks would subscribe to the bonds according to a schedule in line with the needs of the Dubai Financial Support Fund (DFSF), which manages the $20bn bond programme.

The DFSF is funding Dubai World as it tries to reach agreement with creditors over $22bn in debt. On Monday, Dubai dropped plans on Monday to seek preferred creditor status for DFSF in the restructuring of the conglomerate.

Dubai has yet to give a timeframe for future draw downs or their size. The two banks originally drew down $1bn, split equally between a conventional bond issuance to NBAD and a sukuk to Al Hilal Bank.