UPDATE 2-Saudi-owned GIB pulls bond sale on Dubai debt move

(Adds bank's confirmation)

By Sebastian Tong

LONDON, Nov 26 (Reuters) - Saudi-backed Gulf International Bank (GIB) GLFBK.UL said on Thursday it decided to postpone a dollar bond sale despite attracting commitments nearly twice the intended deal size after Dubai's move to suspend repayment of debt owed by its leading state-owned conglomerate.

Confirming an earlier Reuters report, Bahrain-based GIB said it decided to pull the deal after attracting orders for a five-year bond off a recently signed $4 billion euro medium term note programme.

"Following the unexpected announcement from the Dubai...in relation to Dubai World's restructuring and extension of Nakheel's debt maturity, GIB informed the market of its decision to postpone the transaction," GIB said in a statement.

"The order book built quickly with over 60 orders from a diversified investor base to almost double the intended size of the issue," it said.

The scuttling of the deal by GIB -- over 97-percent owned by the Saudi Arabian Monetary Agency and the Public Investment Fund of Saudi Arabia -- is among the first signs that the debt standstill on some of Dubai World's $59 billion in liabilities could hurt global fundraising efforts in the rest of the region.

Arrangers said the deal would have been priced on Wednesday had Dubai not announced on the same day that it was seeking to restructure debt of its state-run conglomerate Dubai World and subsidiary property firm Nakheel. [ID:nGEE5AO2L1]

Investors say Dubai's move will likely lead to a broader risk reassessment of debt issued by the region's sovereign-linked firms.

"There are other sub-sovereign issuers in the region that will need funding in the next year. They will now have to pay wider spreads," a London-based fund manager said.

GIB, rated BBB+ by Standard & Poor's, had been expected to raise at least $500 million with the bond with pricing whispers at around 200 basis points over mid-swaps.