Ras Al Khaimah completes US$400mn sukuk

Published: August 18, 2009

On July 22, the Ras Al Khaimah government completed the formal documentation and signing for its US$400mn sukuk issue, with Standard Chartered Bank, BNP Paribas and Liquidity House acting as joint bookrunners. This issuance is both the first US dollar sukuk issued by a sovereign under a programme and by an emirate in the UAE.

This is the second issuance under the government’s US$2bn sukuk programme. The first issuance was an AED1bn sukuk issue in May 2008.

At the signing ceremony, Sheikh Saud Bin Saqr Al Qasimi, crown prince and deputy ruler of Ras Al-Khaimah said: “We are extremely pleased with the strong investor response to the sukuk issue which serves as an indication of the Ras Al Khaimah government’s continued credibility with the international investor community. This was a well-distributed issue which will establish a liquid benchmark for the government in the US dollar markets.”

The timing of the government’s second foray into the international capital markets was critical. It took place against the back-drop of positive investor sentiments towards high-grade government issuers and a scarcity of US dollar sukuk paper in the international capital markets.

The roadshow began on July 6 in the Middle East and ended on July 10 in Europe. The government’s credit story was communicated in all key financial centres in the Reg S markets, generating broad international investor understanding of the government’s credit story and its strategic importance to the UAE.

Based on investor response received during the roadshows, the government announced its intentions for a second issuance under its sukuk programme, releasing a price whisper in the 8% to 8.5% area for a 5-year issuance on July 14. This was followed by the release of official price guidance of 8% to 8.25% for a target issue size of US$300-US$500mn on the same day.

The order book grew rapidly to over US$1.65bn with over 120 investors, despite being open for only 24 hours in the Middle East and Asia and only six hours in Europe, with final allocations of Middle East 47%, Asia 34% and Europe 19%.