x Abu Dhabi, UAETuesday 23 January 2018

RAK Government considers first Islamic bond issue since 2009

Meetings will follow with investors in Asia, the Middle East with a possible bond sale to follow under a $2bn sukuk programme.

The Government of Ras Al Khaimah plans to test the waters for its first sukuk issuance since 2009, taking advantage of stable capital markets to refinance its existing debt.

The northern emirate’s Government announced yesterday morning that it would conduct a series of meetings with fixed income investor meetings in Asia, the Middle East and Europe, and an Islamic bond sale may follow under its US$ 2 billion sukuk programme.

Investor meetings will be held in Singapore, Kuala Lumpur, Abu Dhabi, Dubai and London, between tomorrow and Monday. The meetings will be arranged by Citigroup (acting as global coordinator), Mashreq, Al Hilal, Standard Chartered and National Bank of Abu Dhabi.

The Government announcement did not give any further details as to the size of issue being considered, nor how the funds were intended to be used.

Any new sukuk issue is likely to be geared towards refinancing the emirate’s existing debt, taking advantage of less volatile capital markets, rather than raising money for larger projects, said Richard Fox, the head of sovereign ratings for the Middle East and Africa with Fitch Ratings in London.

“It’s all about their debt management. The markets have quietened down and yields are very attractive right now,” said Mr Fox. “They’re certainly not going to get any lower than they are now.”

In such a climate it was conceivable that other smaller sovereigns in the region may also look to issue, although there was no indication that larger players such as Dubai were looking to issue, said Mr Fox.

RAK’s last debt issuance was a $400 million sukuk issued in 2009, the first US dollar sukuk issued by a sovereign entity in the UAE. Standard Chartered, BNP Paribas and Liquidity House acted as joint bookrunners for the issue, which is due to mature next year. The emirate also issued a Dh1bn sukuk in May 2008, for which Standard Chartered was sole arranger and bookrunner.