DUBAI, Feb 9 (Reuters) - The emirate of Ras Al Khaimah is in talks with banks about a U.S. dollar bond sale, though it has not yet sent an official request for proposals and there is no indication so far on the timing of any issue, banking sources familiar with the matter said on Thursday.
Standard & Poor’s last month affirmed its A long-term credit rating for the emirate, one of the seven which make up the United Arab Emirates – a move which supported the sovereign’s fund-raising targets, one of the sources noted.
Ras Al Khaimah issued its latest international bond in 2015, when it borrowed $1 billion through a 10-year sukuk issue with a profit rate of 3.094 percent. The sukuk, with an ijara structure, was arranged by Al Hilal Bank, Citi, JP Morgan and National Bank of Abu Dhabi. It was yielding 3.449 percent on Thursday.
Telephone calls and an email to the finance department of Ras Al Khaimah seeking comment were unanswered.
Ras Al Khaimah’s economy was only partially affected by the drop in international oil prices in recent years because the oil and gas sector contributes just 4.8 percent of its gross domestic product, according to a report by S&P.
The emirate relies mostly on nearby countries for its exports, so demand and investments were affected by lower regional growth. Despite this, S&P’s rating remained unchanged because of growth expectations in the tourism sector, particularly ahead of Dubai’s Expo 2020, and other non-oil sectors.
The emirate of Sharjah, on the other hand, was downgraded by S&P last month to BBB+ from A. The move, mostly caused by rising debt levels, led to a drop of about half a point in the price of Sharjah’s outstanding sukuk paper due in 2021 and 2024, Thomson Reuters data showed. (Editing by Andrew Torchia)