Ras Al Khaimah Sounds Out Banks For Syndicated Loan

Ras al-Khaimah (A/A) has sent out requests for proposals for a syndicated loan, according to three bankers, a move that casts doubt on whether a planned sukuk issue will now go ahead.

The emirate sent RFPs for an Islamic bond deal in June, around the same time that other GCC sovereigns, Sharjah and Bahrain, also issued RFPs for potential bond deals.

Unlike its fellow sovereigns, however, Ras al-Khaimah has yet to appoint banks.

The news that it is sounding out banks for a syndicated loan has led some DCM bankers to conclude that the sukuk transaction would either be postponed or cancelled.

“I think they are going to focus on the loan first. I would find it hard to believe that they would issue a sukuk and a loan within the space of a few weeks,” said one Dubai investment banker who has received both RFPs.

“My personal view is that there were some recent changes in the RAK IDO (Investment and Development Office), and perhaps the new people who have come in have re-evaluated the financing plans,” he added.

The IDO, which is in charge of the emirate’s financing plans, did not immediately respond to requests for comment.

Another Dubai-based DCM banker agreed the sukuk deal could either be postponed or cancelled altogether, but a third suggested that the loan could be to fund a specific project and may not have any bearing on the sukuk deal.

Ras al-Khaimah was last in international bond markets in October 2013 with a $500 million, 3.297 percent five-year sukuk priced at a spread of 175 basis points over mid-swaps.

Those levels were considered fairly tight at the time – it priced inside the curve, according to leads – but it is trading even better now at a Z-spread of 69 bps and a cash price of 104.27, according to Tradeweb.