DUBAI, July 6 (Reuters) - The Emirate of Sharjah sold $750
million in 10-year sukuk on Tuesday in its second international
bond sale of the year, as it seeks to plug finances hit by the
impact of the COVID-19 pandemic.
Sharjah sold the Islamic bonds at 3.2%, tightened 30 basis
points from initial price guidance after the sukuk attracted
more than $2.75 billion in orders, the document from one of the
banks on the deal showed.
The deal comes despite governments of the hydrocarbon-rich
Gulf benefiting from a rebound from the shock of last year's oil
price crash, with Brent crude at around $76 on Tuesday,
and the COVID-19 pandemic's impact lessening.
Still, the bond sale was needed to plug its deficit,
projected to edge down slightly to 7.5 billion dirhams in 2021 from 7.8 billion dirhams last year, according
to the sukuk prospectus, reviewed by Reuters.
Sharjah has a relatively diverse economy compared to most
Gulf sovereigns, with its mining and quarrying sector - which
includes crude oil and natural gas - contributing just 4.3% of
nominal gross domestic product last year, according to the
prospectus. The UAE, a federation in which Sharjah is one of
seven emirates, however, is a major crude producer.
Rated long-term BBB-(minus) with a stable outlook by S&P and
Baa3 with a negative outlook by Moody's, Sharjah raised $1.25
billion in a two-tranche conventional bond deal in March
comprising 12- and 30-year notes.
Last year, it raised a total of $2.25 billion via a sale of
sukuk, a 30-year Formosa bond issuance and a reopening of
Sharjah's revenue, which fell 24% to 8.7 billion dirhams
($2.4 billion) year-on-year in 2020, is projected to rise to 9.7
billion dirhams this year, according to the prospectus.
HSBC was global coordinator for the deal, while Abu
Dhabi Islamic Bank, Dubai Islamic Bank,
Sharjah Islamic Bank, Standard Chartered and
The Islamic Corporation for the Development of the Private
Sector were also involved.
($1 = 3.6728 UAE dirham)
(Reporting by Yousef Saba; Editing by Jacqueline Wong and David