DUBAI // Officials from Dubai travelling this week for meetings with international investors are trying to play down the risk of lending to the emirate. Analysts and bankers say risk may be just what investors are now in the mood for.

The Dubai Department of Finance launched a series of investor meetings yesterday in Hong Kong to gauge interest in what could be the emirate’s first international bond sale since the global financial crisis sent its property market downwards, raising questions about its ability to service an estimated US$85 billion (Dh312bn) in debt.

Analysts and bankers said the meetings could very possibly end with Dubai managing to sell new bonds.

“Provided the price is right, there is investor interest,” said Chavan Bhogaita, the head of credit research at the National Bank of Abu Dhabi.

Yields on the emirate’s bonds and those of its companies have fallen, as has the cost of insuring its debt with credit default swaps. Analysts attribute the gains to improving global credit markets and signs of economic recovery, as well as Dubai’s own efforts to better manage its debt, including the establishment in July of a Financial Support Fund to administer the proceeds of Dubai’s bond sales. It has announced plans to sell a second $10bn in bonds.

Officials from the Department of Finance have said their investor meetings will not focus on that bond sale; analysts say those bonds are most likely to be purchased again by the Central Bank or the federal Government.

Though they have fallen by almost 75 per cent since their peak earlier this year, prices for Dubai’s credit default swaps remain among the highest for a government. There is still uncertainty about how the government-owned developer Nakheel will repay a $3.52bn bond in mid-December. Dubai has a $1bn bond of its own maturing early next month.

A banker who has seen Dubai’s presentation materials to investors said the presentation emphasised the support Dubai had received from the Central Bank and stressed the strength of the UAE’s federal finances, rather than focusing on Dubai’s financial situation in isolation.

But analysts and bankers said it may be the relatively high price Dubai would have to pay that could paradoxically attract investors most. Dubai’s credit default swaps indicate the emirate would probably have to offer investors at least 3.2 per cent. Bankers said in a world where bond yields are falling with rising risk appetite, those kinds of interest rates are likely to be very attractive to some investors.

Dubai’s officials may be going out on a sounding mission, said another banker, but they may come home with a deal.

Since March, low US interest rates have sparked a rally in global financial markets and rekindled interest in emerging-market debt that offers higher yields than investors can earn on dollar-denominated assets in the US.

That has sparked a flurry of bond sales from governments in developing countries, including more than $9bn in bond sales this year from Abu Dhabi.

Dubai has been slower to venture back into the market.

So far, the emirate and the companies it owns have managed to pay off or refinance every debt that has come due this year, though contractors have complained of late or missed payments.

But after the Investment Corporation of Dubai had to come up with at least $900m in February to help Borse Dubai refinance a $3.4bn loan, the emirate turned to the Central Bank to buy $10bn in bonds to keep its companies afloat. Since then, most gauges of confidence in Dubai’s creditworthiness have improved.