DUBAI: The United Arab Emirates central bank said it was making it easier for Islamic banks to access its special lending facility by expanding the range of collateral they can use.

From April 1 Islamic banks, which account for roughly a quarter of banking assets in the UAE, will be allowed to use Shariah-compliant securities other than central bank-issued Islamic certificates of deposit to borrow overnight from the central bank's Collateralized Murabaha Facility.

The expansion of the collateral will permit Islamic banks to obtain central bank liquidity in the same way that conventional banks do from the Interim Marginal Lending Facility, which was launched last July, the central bank said in a statement on Tuesday.

From April 1, eligible collateral will range from sukuk issued by foreign governments, which must have a minimum long-term credit rating of A, to UAE corporate entities and even some sukuk which are rated below investment grade or do not have ratings, at the central bank's discretion.

Meanwhile, the Emirate of Ras Al-Khaimah has launched a $1 billion, 10-year sukuk that will price later on Tuesday, a document from lead arrangers showed.

The transaction was set to price at a spread of 110 bps over midswaps, which is at the tighter end of a final guidance of 115 bps plus/minus 5 bps over midswaps. This is lower than initial pricing guidance of around 125 bps over midswaps given earlier on Tuesday.

The emirate, which is issuing sukuk with an ijara structure, has garnered orders worth about $2.5 billion, an earlier document showed.

Ras Al-Khaimah, rated A by Standard and Poor's and Fitch, has appointed Al Hilal Bank, Citigroup, J.P.Morgan and National Bank of Abu Dhabi for the sukuk sale.

Ras al-Khaimah is one of seven emirates that make up the United Arab Emirates.