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Ras Al Khaimah to raise Dh1.8b with bond issue

Sovereign and corporate issuers look to diversify funding sources

Gulf News

Dubai:  The Government of Ras Al Khaimah is in the process of raising funds through a benchmark-size bond issue, banking industry sources told Gulf News yesterday.

A benchmark size issue refers to a minimum of $500 million (Dh1.8 billion). "The government could be targeting a larger issue," said a banker involved in the deal.

Banking sources said yesterday Royal Bank of Scotland and Citigroup are arranging the deal. However, both banks declined to comment when contacted by Gulf News.

In May 2008, Ras Al Khaimah sold sukuk worth Dh1 billion, the first tranche of a $2 billion bond programme to finance infrastructure development. In July last year the emirate sold a $400 million second tranche.

Maturing debt

Investment bankers said a number of bond issues from sovereign issuers and government related entities are expected come to market this year as the Gulf region has a total of $60 billion in debt maturing this year.

"Both sovereign and corporate issuers are looking at opportunities to diversify their funding sources in the context of limited liquidity in the bank syndication market. This could lead to more bond issues in the region," said David Fisher, Chief Executive Officer of Grant Thornton Middle East.

Royal Bank of Scotland estimates $8-$10 billion bond issues in the region in the current quarter.

The Government of Dubai raised $1.25 billion through a bond issue last month. The issue had a book size of more than $5 billion.