The emirate of Sharjah is planning to issue its first sovereign sukuk, the Islamic equivalent of a sovereign bond, and has approached three banks to manage the issue, according to global news agencies. The value of Sharjah’s sovereign sukuk is yet unknown, but banking sources say that they expect the launch of the new bond to take place as early as September. The news comes soon after Sharjah was rated A3 by Moody’s Investors Service and A by Standard & Poor’s, with both reporting a stable outlook for the emirate.
Neighbours Abu Dhabi, Dubai and Ras Al Khaimah have all issued sukuk, making Sharjah the fourth member of the United Arab Emirates to use the financial instrument. The sukuk has recently made global news headlines when the United Kingdom issued its first sovereign sukuk in June of this year.
Whilst the sukuk would be Sharjah’s first international Islamic bond issue, Sharjah Islamic Bank (SIB) currently has two sukuk, one $400 million sukuk with 4.715 per cent profit maturing in 2016 and a one five-year sukuk of $500 million at 2.95 per cent maturing in 2018.
SIB, which is 30% owned by the government of Sharjah, has already positioned itself as an Islamic banking leader with a growing portfolio of Shari’ah-compliant banking products. In May, SIB announced its membership of the NASDAQ Dubai Murabaha Platform allowing it offer unique advantages to bank customers seeking Sharia solutions. The bank’s 2013 net profits for 2013 grew by 12.9 percent year-on-year to AED 307.1 million (US$ 84 million).
Sharjah has recently received recognition for its fiscal policy, the diversity of its economy and it’s efforts to stimulate interest in Islamic arts and sciences. Sharjah was voted the capital of Islamic Culture for 2014 by the Organization of Islamic Cooperation and voted the Capital of Arab Tourism 2015 by the council of Arab tourism ministers.
Sources: Bloomberg, Reuters, news media