The Government of Sharjah has announced the issuance of its debut transaction in the Debt Capital Markets, a $750 million 10-year Sukuk Al Ijara priced at 3.764 per cent ,said Standard Chartered in official note.
This is not only the Government of Sharjah's first issuance, but also the first time a sovereign has executed a 10-year Sukuk in its debut issuance. Following investor meetings in Singapore, Malaysia, the UAE, Saudi Arabia and the UK, the Government communicated initial price thoughts to the market of low to mid 100 basis points over the 10-year mid-swap rate. Responding to overwhelming demand, the Government tightened the pricing to the 120bps area, before finally settling at 110bps, giving an eventual profit rate of 3.764 per cent.
Extremely high and broad-based demand persisted, with the final order book swelling to $7.85 billion from around 250 different investors within a day, representing an oversubscription of the eventual issuance of over 10 times.
While the investor base in the UAE and wider GCC was very strong, orders from international high-grade and emerging markets investors were also exceptionally high. Orders were well diversified from "real-money" investors, including central banks, fund managers, insurance companies and banks from a wide geographic spread across Asia, Europe, the Middle East and offshore US.
HSBC assisted the Government of Sharjah as global coordinator for the transaction, with KFH Investment, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered acting alongside them as Joint Lead Managers. Al Hilal Bank, Dubai Islamic Bank and Arab Banking Corporation were appointed as co-lead managers for the transaction.
For the Government of Sharjah, accessing the Debt Capital Markets through a debut sukuk issuance meets a number of important objectives. From a financial perspective, the transaction has helped the Government to diversify its investor base, access longer fixed-term tenors and optimise pricing. From a wider economic perspective, the issuance will provide a benchmark for any transactions undertaken by Sharjah entities in both the wider public sector and the private sector. It will also enhance the efforts of the UAE authorities to develop the local financial markets.
Finally, this transaction is an important and highly visible step forward in the Government of Sharjah's efforts to adopt international best practice in all its activities and to present the modern, outward-looking face of the emirate to a global audience.
The enormous demand for the Government of Sharjah Sukuk reflects the strength of the Emirate's value proposition for investors.
With strong investment-grade credit ratings from Standard & Poor's ('A' Stable) and Moody's ('A3' Stable), Sharjah offers an extremely stable and low-risk option for investors looking to expand their portfolios. The long history of careful management of the public finances by the Government has ensured a very low level of Government debt and a high degree of fiscal flexibility. This gave investors the confidence to invest in a longer-term product, despite this being the Government of Sharjah's first foray into the public market.
One of the most diversified economies in the GCC, Sharjah has particular strength in manufacturing and industry, propelled by 19 industrial areas and the free zones at Hamriyah and Sharjah International Airport. The excellent transport and logistics infrastructure, with three thriving ports as well as an expanding passenger and cargo airport, enables future economic expansion.
This is not only the Government of Sharjah's first issuance, but also the first time a sovereign has executed a 10-year Sukuk in its debut issuance. Following investor meetings in Singapore, Malaysia, the UAE, Saudi Arabia and the UK, the Government communicated initial price thoughts to the market of low to mid 100 basis points over the 10-year mid-swap rate. Responding to overwhelming demand, the Government tightened the pricing to the 120bps area, before finally settling at 110bps, giving an eventual profit rate of 3.764 per cent.
Extremely high and broad-based demand persisted, with the final order book swelling to $7.85 billion from around 250 different investors within a day, representing an oversubscription of the eventual issuance of over 10 times.
While the investor base in the UAE and wider GCC was very strong, orders from international high-grade and emerging markets investors were also exceptionally high. Orders were well diversified from "real-money" investors, including central banks, fund managers, insurance companies and banks from a wide geographic spread across Asia, Europe, the Middle East and offshore US.
HSBC assisted the Government of Sharjah as global coordinator for the transaction, with KFH Investment, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered acting alongside them as Joint Lead Managers. Al Hilal Bank, Dubai Islamic Bank and Arab Banking Corporation were appointed as co-lead managers for the transaction.
For the Government of Sharjah, accessing the Debt Capital Markets through a debut sukuk issuance meets a number of important objectives. From a financial perspective, the transaction has helped the Government to diversify its investor base, access longer fixed-term tenors and optimise pricing. From a wider economic perspective, the issuance will provide a benchmark for any transactions undertaken by Sharjah entities in both the wider public sector and the private sector. It will also enhance the efforts of the UAE authorities to develop the local financial markets.
Finally, this transaction is an important and highly visible step forward in the Government of Sharjah's efforts to adopt international best practice in all its activities and to present the modern, outward-looking face of the emirate to a global audience.
The enormous demand for the Government of Sharjah Sukuk reflects the strength of the Emirate's value proposition for investors.
With strong investment-grade credit ratings from Standard & Poor's ('A' Stable) and Moody's ('A3' Stable), Sharjah offers an extremely stable and low-risk option for investors looking to expand their portfolios. The long history of careful management of the public finances by the Government has ensured a very low level of Government debt and a high degree of fiscal flexibility. This gave investors the confidence to invest in a longer-term product, despite this being the Government of Sharjah's first foray into the public market.
One of the most diversified economies in the GCC, Sharjah has particular strength in manufacturing and industry, propelled by 19 industrial areas and the free zones at Hamriyah and Sharjah International Airport. The excellent transport and logistics infrastructure, with three thriving ports as well as an expanding passenger and cargo airport, enables future economic expansion.
Source:
Mubasher
