The Emirate of Sharjah has joined the slew of Gulf sovereigns to tap the international debt markets. It has hired HSBC as the lead coordinator for an issuance of ~$750mn 10Y dollar denominated sukuk, its second offering this year. The emirate has an investment grade rating – Baa3 with a negative outlook by Moody’s and BBB- with stable outlook by S&P. S&P has also affirmed Sharjah Sukuk Program Ltd (SSPL) senior unsecured debt at BBB-/A-3 long and short-term ratings on Monday. As per S&P, “Sukuk issuance under the program is made using a structure that comprises two stages: a Murabaha contract using commodities as underlying assets (up to 49%), and a sale and purchase agreement of tangible assets (typically land plots) constituting not less than 51% of the principal throughout the life of the sukuk (55% at initial issuance).” Abu Dhabi Islamic Bank , Dubai Islamic Bank, Sharjah Islamic Bank , Standard Chartered and The Islamic Corporation for the Development of the Private Sector will help in arranging investor calls. The third largest sheikhdom in UAE has faced pressures to its finances due to the pandemic and is forecasted to have a deficit of more than 10% of GDP this year as per S&P. To cater to its financing needs, the emirate had raised $1.25bn via a dual-tranche 12Y/30Y offering in March. It had also tapped the debt market last year for $2.25bn through the sale of sukuk, 30Y formosa bond and through a tap of its existing bonds.
SSPL’s 3.234% 2029 Sukuk yielding 2.79% were 0.08 points down to trade at 103.26. Sharjah’s 3.625% 2033 yielding 3.53% were down 0.14 to trade at 100.87.
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