Sharjah hires banks for $1bn sukuk sale

The emirate of Sharjah hired banks to raise as much as $1bn from international debt markets, joining wealthier Gulf states to shore up its finances against the fallout of the coronavirus pandemic.

The third-biggest sheikhdom in the United Arab Emirates mandated HSBC Holdings, Mashreqbank, Sharjah Islamic Bank and Dubai Islamic Bank among others for the deal, people with knowledge of the matter said.

A sale could happen as soon as this week and proceeds will be used for general budgetary needs, the people said, asking not to be identified because the information is private. A representative for the government of Sharjah declined to comment.

S&P Global Ratings lowered Sharjah’s outlook to negative last month and affirmed its long-term rating at BBB, the second-lowest investment grade.

The coronavirus pandemic coupled with a collapse in oil prices is putting a strain on the finances of Middle Eastern energy producers, prompting Saudi Arabia, Qatar, members of the UAE and Bahrain to sell more than $30bn of bonds this year. Abu Dhabi recently raised additional funds from international debt markets just weeks after a $7bn bond sale as it took advantage of a drop in borrowing costs.