DUBAI - Sharjah, the third-largest emirate of the United Arab Emirates, has hired banks to arrange the issuance of seven-year U.S. dollar denominated sukuk, or Islamic bonds, a document showed.
HSBC was hired as global coordinator for the planned transaction and is joined by Bank ABC, Dubai Islamic Bank, Gulf International Bank, Mashreqbank and Sharjah Islamic Bank as joint lead managers and bookrunners.
The emirate will hold a call with investors on Monday and a benchmark sukuk issuance may follow, subject to market conditions, the document issued by one of the banks leading the deal and seen by Reuters showed.
Benchmark bonds are generally meant to be over $500 million, but a source close to the deal said the transaction could range between $750 million and $1 billion.
Sharjah, rated Baa2 by Moody's and BBB by S&P, is a relatively frequent issuer of U.S. dollar Islamic bonds.
S&P Global Ratings in April revised its outlook on the emirate to negative from stable due to lower oil prices and the impact of the new coronavirus.
"Although we expect GDP growth to recover in 2021, lower-for-longer oil prices and a protracted lockdown period could pressure the emirate's fiscal position," the agency said.
(Reporting by Davide Barbuscia, Editing by William Maclean) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: firstname.lastname@example.org))