Ras Al Khaimah returned to the international bond market for the first time since 2015 on Wednesday, with its US$1bn 10-year sukuk offering coming tight to other GCC sovereigns.

The emirate, rated A/A+, began marketing the issuance at the 120bp area over Treasuries.

Given the absence of a meaningful curve, leads guided investors to consider other GCC sovereigns and quasi-sovereigns. At the opening level, RAK was coming more than 70bp back of Abu Dhabi's 5% April 2034s and nearly 45bp wide of Saudi Arabia's 5.25% June 2034s.

Books peaked at more than US$4.4bn, which enabled the leads to ramp in pricing to a final spread of plus 80bp. Final demand exceeded US$4.1bn. After adjusting for the curve extension, RAK arguably came inside Saudi Arabia. The issuer said the deal came 10bp through fair value, with its rarity and scarcity value playing in its favour.

The sukuk is an ijara-murabaha structure. It is consistent with the most recent Sharia developments, as promulgated by the UAE Central Bank Higher Sharia Authority, with the sale of the ijara assets being an enforceable sale with a specific exemption by decree for registration of the real estate ijara assets.

The 5% sukuk had broad distribution, with 57.8% going to investors from MENA, 35% from the UK/continental Europe and 7.2% from Asia/others.

Ras Al Khaimah, one of the seven emirates that form the UAE, has a US$1bn sukuk due on March 31.

Abu Dhabi Commercial Bank, Citigroup, Emirates NBD Capital, First Abu Dhabi Bank, National Bank of Ras Al Khaimah and Standard Chartered were the global coordinators and lead managers.

Source: IFR