Please register to access this content.
To continue viewing the content you love, please sign in or create a new account
Dismiss
This content is for our paying subscribers only

Business Banking & Insurance

Sharjah raises Dh2 billion to help COVID-19 affected businesses, individuals

Funds will be used to get impacted businesses and banks back on track



The Sukuk issue proceeds will be used to help out businesses and individuals impacted by the COVID-19 crisis.
Image Credit: Gulf News Archive

Dubai: Bank of Sharjah was the sole lead manager and arranger for the Dh2 billion Sukuk trust certificates issued by the Sharjah Government. The funds raised will be used to “support the Sharjah economy”, corporates as well as the banking sector impacted by the COVID-19 outbreak.

The securities were issued under the Sharjah Liquidity Support Mechanism (SLSM), a framework initiated by the government to enhance liquidity for Sharjah’s banking system. It is done in sync with the Targeted Economic Support Scheme (TESS) of the Central Bank of the UAE.

The certificates, issued on May 19, pay a profit rate of 1.5 per cent and have a one-year tenure.

Subsequent tranches with one or more other banks are expected to expand the SLSM to AED 4 billion.

A Dh4 billion backstop

Sharjah Finance Department (SFD) recently established a framework of Dh4 billion to enhance liquidity in the banking system. It was aimed at providing additional financial assistance to all businesses impacted by the outbreak.

Advertisement

Issued as a 12-month dirham-denominated paper, the Sharjah Liquidity Support Mechanism (SLSM) sukuk represents the first rated short-term local currency tradeable instrument in the UAE. It can be used for liquidity management by banks. (The paper has a short-term investment grade rating of A-2 by Standard & Poor’s rating agency.)

According to Waleed Al Sayegh, Director-General of Sharjah Finance Department said: “This service will allow banks to use the sukuk as security to access liquidity facilities at the UAE Central Bank, by following the required guidelines.”

Advertisement