Moody’s Investors Service has assigned a provisional rating of (P)A3 to the US dollar sovereign Islamic bond issue proposed by the Government of Sharjah. Plans for a sovereign sukuk first came to light in June and it has since been revealed that the government has mandated HSBC, Kuwait Finance House, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered to manage the transaction. The value of Sharjah’s sovereign sukuk is yet unknown, while sources say that the launch of the new bond could take place as early as this month.
“Moody’s A3 government bond rating and stable outlook on Sharjah is primarily supported by the emirate’s very strong fiscal and government debt position, which benefits from the emirate’s membership in the United Arab Emirates,” said Steffen Dyck, Moody’s lead sovereign analyst for Sharjah. The credit rating agency also noted that Sharjah’s competitive manufacturing sector and relatively higher degree of economic diversification compared to the rest of the UAE and Gulf Cooperation Council (GCC) states supports the emirate’s credit strength.
Moody’s published its first report on Sharjah in June, awarding the emirate with a A3 stable rating, whilst Standard & Poor’s confirmed its A/A-1 long- and short-term foreign and local currency sovereign credit ratings for Sharjah in May, both with a stable outlook.
A statement from Moody’s confirmed that the proposed US dollar trust certificates would be issued by Sharjah Sukuk Limited, a special purpose financial vehicle established in the Cayman Islands by the Government of Sharjah.
Neighbouring Emirates Abu Dhabi, Dubai and Ras Al Khaimah have all issued sukuk, making Sharjah the fourth member of the union to use Islamic bonds. The unrated emirate of Dubai listed a 15 year US$750 million sukuk on the Dubai Financial Market (DFM) in April, which was over-subscribed by three times. The sukuk made global news headlines this year when the United Kingdom issued its first sovereign sukuk in June.
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.
Source: Moody’s Investors Service, media