DUBAI- The emirate of Sharjah, the third-largest constituent of the United Arab Emirates, is set to raise $1 billion in seven-year sukuk, or Islamic bonds, a source familiar with the terms of the transaction said.

Sharjah started marketing the paper earlier on Tuesday with a spread of around 180 basis points (bps) over mid-swap, which was later tightened to 155 bps, documents issued by one of the banks leading the deal showed.

Bank ABC, Dubai Islamic Bank , HSBC, KFH Capital, Sharjah Islamic Bank and Standard Chartered Bank have been hired as deal bookrunners.

(Reporting by Davide Barbuscia, Editing by William Maclean) ((; +971522604297; Reuters Messaging: rm://