Sharjah sells $1bn sukuk

Sharjah in the UAE. In May, the emirate raised 2 billion dirhams ($545 million) in privately placed one-year sukuk to support its economy during the coronavirus pandemic. (Shutterstock)
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Updated 03 June 2020

Sharjah sells $1bn sukuk

  • Gulf states seek to bolster finances hit by pandemic and historic slide in oil prices

DUBAI: Sharjah, the third-largest emirate of the UAE, sold $1 billion in seven-year sukuk, or Islamic bonds, on Tuesday, according to a document from one of the banks arranging the deal.

The debt sale comes as several governments in the Gulf seek to bolster their finances to face the economic fallout from the coronavirus pandemic and a historic slide in oil prices.

Sharjah set the final spread at 245 basis points (bps) over midswaps for the sukuk, which are Islamic sharia-compliant bonds, according to the document seen by Reuters.

It tightened the spread by 30 bps from where it began marketing the notes earlier on Tuesday.

Sharjah, rated Baa2 by Moody’s ratings agency and BBB by S&P, is a relatively frequent issuer of US dollar Islamic bonds.

HSBC was hired as global coordinator for the transaction. Other banks on the deal were Bank ABC, Dubai Islamic Bank, Gulf International Bank, Mashreqbank and Sharjah Islamic Bank.

In May, the emirate raised 2 billion dirhams ($545 million) in privately placed one-year sukuk to support its economy during the coronavirus pandemic, according to a statement by Bank of Sharjah, which arranged that deal.

“Issued as 12 month dirham-denominated paper in several tranches, the Sharjah Liquidity Support Mechanism (SLSM) sukuk represents the first rated short term local currency tradeable instrument in the UAE, which can be used for liquidity management by banks,” the Sharjah Finance Department said in a statement on Tuesday, confirming that deal. It said that it was a first tranche and that further tranches with one or more other banks were expected to expand the SLSM to 4 billion dirhams.

S&P Global Ratings in April revised its outlook on the emirate to negative from stable due to lower oil prices and the impact of the new coronavirus.

“Although we expect GDP growth to recover in 2021, lower-for-longer oil prices and a protracted lockdown period could pressure the emirate’s fiscal position,” the agency said.


Vaccine progress lifts stocks, dollar still sickly

Updated 30 min 9 sec ago

Vaccine progress lifts stocks, dollar still sickly

  • STOXX index of Europe’s 600 largest firms rises to its highest since February

LONDON: Investors scooped up stocks, commodities and emerging-market currencies and gave the dollar a wide berth as AstraZeneca and Oxford University provided markets with their now-regular Monday shot of encouraging COVID-19 vaccine news.

The STOXX index of Europe’s 600 largest firms rose to its highest since February, Wall Street was pointing up 0.6 percent and Brent futures were nearly 1.5 percent stronger. AstraZeneca and Oxford vaccine, which is set to cost just a few dollars a shot and should be easier to ramp up and store than vaccines by Pfizer and BioNTech and Moderna, could also be up to 90 percent effective.

As the dollar buckled through a range it has been in for the past few months, the euro touched $1.19, but it was the emerging markets that are likely to benefit from a cheaper and easier-to-store drug that rallied the most.

South Africa’s rand shrugged off a double sovereign credit-rating downgrade over the weekend to add 0.8 percent. Russia’s rouble and Mexican peso both climbed half a percent to bolster their stellar months.

“The combined vaccine news of the last few weeks ... will lead to a much faster pace of normalization to our daily lives compared to what we would have assumed just a few weeks ago,” analysts at Deutsche Bank said.

Markets’ optimism also came after a top official of the US government’s vaccine-development effort said Sunday that the first vaccines there could be given to US health care workers and some others by mid-December.

US shares looked set to mimic gains in Europe and Asia, as Nasdaq futures rose 0.4 percent, Dow futures rose 0.7 percent, and US e-mini futures for the S&P 500 were 0.6 percent higher at 3,576.

The rally also showed investors are willing to look past the grim US case numbers — which topped 12 million over the weekend — and mixed European economic data released on Monday. IHS Markit’s headline flash composite PMI, seen as a good guide to economic health, fell to 45.1 in November from October’s 50.0 — the level separating growth from contraction. A Reuters poll had predicted a shallower dip to 46.1.

The composite future output index jumped to 60.1 from 56.5, its highest since February.

“Today’s vaccine news is positive, but it is only partly responsible for the rally in stock markets,” said Philip Shaw, chief economist at Investec in London. “(It) is also being driven by the news that the US hopes to start the vaccination program in under three weeks.”