ESG financing is in high demand from investors worldwide, and Gulf issuers are increasingly looking to capitalize on this demand.
In light of the above, the Sharjah government intends to raise one billion dollars through the sale of the first sustainable 9-year dollar-denominated bonds.
According to Justin Alexander, director of Gulf Economics Consulting and specialist analyst in the Gulf region at Global Source Partners, this is the GCC countries’ first sustainable sovereign bond, which means that the proceeds will be used for environmental or social purposes.
Read more: UAE’s first 2023 T-bonds auction sees issuance of AED1.1 worth
Alexander went on to say that sustainable bonds are broader than green bonds, which are being considered by several Gulf countries, including Qatar, Bahrain, and Saudi Arabia.
According to Reuters, the Sharjah emirate priced the bonds at 280 basis points higher than US Treasury bonds.
A separate earlier document revealed the initial indicative price was about 310 basis points higher than US Treasury bonds due in February 2033.
The international co-ordinator is HSBC, while the joint directors and book runners are Abu Dhabi Commercial Bank, Citi and Gulf International Bank, IMI-Intesa Sanpaolo, Investbank, and SMBC Niko.
Alexander stated in a research note last week that Sharjah requires $4.7 billion in financing this year to bridge a $2.3 billion budget deficit and $2.4 billion in bank loans maturing.
Standard & Poor’s changed Sharjah’s outlook from negative to stable, while maintaining the long-term and short-term sovereign credit ratings in foreign and local currency at BBB- / A-3.
In July 2022, “Moody’s” downgraded Sharjah’s credit rating from Baa3 to Ba1, and changed the emirate’s outlook from negative to stable.
Largest budget in Sharjah’s history
In 2021, Sheikh Sultan bin Muhammad Al Qasimi, Member of the Supreme Council and Ruler of Sharjah approved the largest budget in the emirate’s history, with total expenditures totaling approximately 33.6 billion dirhams ($9.15 billion), a 12% increase over 2020.
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