Ammon News - AMMONNEWS - BBC - Dubai's finance department has sold $10bn (£6.9bn) in bonds to the United Arab Emirates (UAE), to ease the emirate's liquidity problems.

Leading Dubai shares surged 8% on Monday on optimism over the UAE's willingness to provide support.

Dubai will use the money to pay off its multi-billion dollar debt it has accumulated for expansion projects.

The global financial crisis has hit Dubai's key real estate sector hard and made it more expensive to gain credit.

While the United Arab Emirates (UAE) is one of the region's leading oil producers, Dubai does not have strong crude oil resources and has relied on credit to finance its expansion into a regional financial and tourism hub.

Necessary funding

The bond deal is part of a $20bn long term scheme launched by the government of Dubai on Sunday.

"This program will secure the necessary funding for Dubai to meet its financial obligations and continue development program," the emirate, one of the seven that make up the UAE, said in a statement.

The department said the deal would provide "the necessary liquidity" to make up for the fall in global funding seen over the past year.

The five-year bonds would pay a 4% annual interest, it said.

Photo: AFP