DUBAI - The government of Sharjah, the third-largest constituent of the United Arab Emirates, has raised $1 billion through a 10-year sukuk, the emirate’s biggest transaction in debt capital markets, a government official said on Thursday.

The Islamic bond issue, the first under Sharjah’s newly established sukuk programme, was launched with initial price guidance of 150 basis points over the 10-year mid-swap rate and subsequently tightened to 135 bps. The deal priced on Wednesday.

With such pricing “we avoided paying any new issuance premium despite the continuing fluctuations we have been seeing in global financial markets”, Tom Koczwara, debt-management adviser to the government, said in an emailed statement.

“Our choice to pursue the maximum deal size and tenor from the options available to us was based on strong positive feedback from our marketing activities,” he said.

Demand for the issue was more than $2.4 billion, according to IFR News.

The sukuk is Sharjah’s second bond issue this year, preceded by a 2 billion renminbi ($316 million) three-year issuance in China’s Panda bond market in February.

The sukuk was arranged by Dubai Islamic Bank, HSBC, Sharjah Islamic Bank and Standard Chartered. ($1 = 6.3276 Chinese yuan renminbi)

(Reporting by Davide Barbuscia Editing by David Goodman) ((; +971522604297; Reuters Messaging: