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3 Minutes to Read (Updates with size, launch, final yield, demand, background) Reuters, DUBAI, July 6 – The Emirate of Sharjah offered $750 million in 10-year sukuk on Tuesday, its second overseas bond sale of the year, as it tries to shore up its finances after the COVID-19 outbreak. According to a document from one of the deal’s banks, Sharjah sold the Islamic bonds at 3.2 percent, tightening 30 basis points from its initial price guide after the sukuk received more than $2.75 billion in orders. Despite governments in the oil-rich Gulf profiting from a resurgence from the shock of last year’s oil price fall, with Brent crude trading around $76 on Tuesday, and the COVID-19 pandemic’s impact fading, the agreement was reached. Nonetheless, according to the sukuk prospectus reviewed by Reuters, the bond sale was required to fill its deficit, which is expected to fall slightly to 7.5 billion dirhams ($2.04 billion) in 2021 from 7.8 billion dirhams last year. In comparison to most Gulf states, Sharjah’s economy is rather diverse, with the mining and quarrying industry – which includes crude oil and natural gas – accounting for only 4.3 percent of nominal GDP last year, according to the prospectus. However, the United Arab Emirates, of which Sharjah is one of seven emirates, is a big crude producer. Sharjah raised $1.25 billion in a two-tranche conventional bond offering in March, consisting of 12- and 30-year notes, and was rated BBB-(minus) by S&P with a stable outlook and Baa3 by Moody’s with a negative outlook. It raised $2.25 billion last year through the sale of sukuk, the issue of a 30-year Formosa bond, and the reopening of existing bonds. According to the prospectus, Sharjah’s revenue, which declined 24% year on year to 8.7 billion dirhams ($2.4 billion) in 2020, is expected to grow to 9.7 billion dirhams this year. The agreement was coordinated globally by HSBC, with participation from Abu Dhabi Islamic Bank, Dubai Islamic Bank, Sharjah Islamic Bank, Standard Chartered, and The Islamic Corporation for the Development of the Private Sector. (1 US dollar = 3.6728 UAE dirham) (Yousef Saba contributed reporting; Jacqueline Wong and David Evans edited the piece.)/nRead More

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