DUBAI, Oct 27 (Reuters) - Sharjah, the third-largest emirate of the United Arab Emirates, has hired banks to arrange a reopening of its existing $750 million 2029 sukuk, or Islamic bond, that it sold last year, a document showed.
It has hired Mashreqbank as financial advisor and mandated Dubai Islamic Bank, HSBC, Sharjah Islamic Bank and Standard Chartered to arrange investor calls starting on Tuesday. A tap of the $750 million 3.234% sukuk due October 23, 2029 will follow, subject to market conditions.
A bond tap is where an existing transaction is reopened for subscription using the same documentation as before.
Last week, S&P Global Ratings downgraded Sharjah's long-tem credit rating to BBB- from BBB, citing a weakening fiscal position.
It said it expected the government's interest burden would increase to about 17% of revenue by 2023, up from about 12% in 2020, as interest payments rose in line with higher debt levels.
"Sharjah's ability to expand its already-low revenue base remains constrained. The economic fallout from the COVID-19 pandemic and headwinds to economic activity from lower oil prices will materially lower 2020 government revenue compared with 2019," S&P said.
Sharjah has already raised $2 billion with two bond issues this year, in June and July, as it seeks to bolster its finances which have been hit by the pandemic and cheap oil.
(Reporting by Yousef Saba; Editing by Kirsten Donovan)
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