DUBAI - Sharjah, the third-largest of the United Arab Emirates, sold $250 million in a re-opening of existing sukuk due in October 2029, a document from one of the banks arranging the deal showed on Wednesday.

It set the final yield at 2.75% after giving initial price guidance of around 2.9% and got more than $600 million in orders for the tap of the $750 million 3.234% sukuk due October 23, 2029.

A bond tap is where an existing transaction is reopened using the same documentation as before. This deal is expected to close later on Wednesday.

Sharjah has already raised $2 billion with two bond issues this year, in June and July, as it seeks to bolster its finances, which have been hit by the pandemic and cheap oil. 

Last week, S&P Global Ratings downgraded Sharjah's long-tem credit rating to BBB- from BBB, citing a weakening fiscal position.

It said it expected the government's interest burden would increase to about 17% of revenue by 2023, up from about 12% in 2020, as interest payments rose in line with higher debt levels.

"Sharjah's ability to expand its already-low revenue base remains constrained. The economic fallout from the COVID-19 pandemic and headwinds to economic activity from lower oil prices will materially lower 2020 government revenue compared with 2019," S&P said.

Dubai Islamic Bank , HSBC, Sharjah Islamic Bank and Standard Chartered arranged the deal while Mashreqbank was hired as financial advisor.

(Reporting by Yousef Saba; editing by Tom Hogue, Larry King) ((Yousef.Saba@thomsonreuters.com; +971562166204))