Sharjah plans its maiden sukuk

July 09, 2014 - 2:47:19 am

LONDON: The emirate of Sharjah is planning its first foray into international bond markets with a debut sukuk deal, three bankers with knowledge of the matter said.

The sovereign is rumoured to have appointed banks to manage the transaction and could launch the deal as early as September, the bankers said.

While Sharjah itself has not issued a bond in international markets before, state-owned Sharjah Islamic Bank has two sukuk outstanding: a $400m, 4.715 percent 2016 bond and a $500m, 2.95 percent 2018 note.

Sharjah would become the fourth emirate from the United Arab Emirates to issue bonds. Apart from heavyweights Abu Dhabi and Dubai, Ras Al Khaimah has three sukuk notes outstanding and is probably the closest comparable issuer, bankers said.

“There are similarities: they are both part of the UAE federation, they are both rated similarly and ratings agencies derive a lot of comfort from the support from the federation and Abu Dhabi in particular,” one Dubai-based debt capital markets banker said.

Both emirates have received development grants from the Abu Dhabi authorities for infrastructure projects, such as the development of the road network.

“Sharjah is a more diversified economy than RAK, it has been around for longer and its contribution to the federation is higher. As a debut issuer, it also offers some diversity,” the banker said.