Emirate of Sharjah to raise $250mln in 2029 sukuk re-opening

The deal is expected to close later on Wednesday

  
Image used for illustrative purpose. Young Arab investor monitoring his investments.

Image used for illustrative purpose. Young Arab investor monitoring his investments.

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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))

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