Sharjah rules out immediate plans for more sukuk

DUBAI: The Gulf Arab emirate of Sharjah has no plans to become a regular issuer for now despite drawing demand more than 10 times the value of its $750 million debut
sukuk issue, the director of its debt management office told Reuters on Thursday.
Although it is developing its tourism and manufacturing industries, the third largest UAE member lacks the oil resources of Abu Dhabi and the commercial draw of neighboring Dubai. "We do not have any short-term plans to come back to capital markets," Tom Koczwara said.
"We structured this (the sukuk issue) as a standalone. The process has gone well ... so if it fits our strategy we are very confident we can do it in the future," he said, noting there were no immediate plans to draft an issuance program.
The government has yet to decide how it will use the proceeds but Koczwara said the aim was to refinance imminently maturing debt as well as legacy debt inconsistent with current pricing terms. Covering budget expenditures is another target.
Some $1.3 billion worth of Sharjah's government debt will mature between 2014 and 2019 with $234.4 million due in 2015, according to a presentation for investors.
"First two categories will have some impact on the level of 2015 maturities," Koczwara said.
About $7.85 billion of orders poured in for the 10-year sukuk ijara from 250 investors on Wednesday. The issue priced at a yield of 3.764 percent.
"We are delighted with the success of the issue. We met and exceeded all of our own targets," Koczwara said.
Sharjah has recorded fiscal deficits of about 1 to 2 percent of GDP on average since 2008. Last year, its deficit widened to $270.7 million from $233.9 million as spending jumped to more than 13 percent of gross domestic product (GDP) at $1.6 billion.
Its gross government debt rose to 6.8 percent of GDP last year from 5.9 percent in 2012. Total public sector net debt stood at 16.8 percent of GDP in 2013.
With a population of under 1 million, Sharjah's $22 billion economy accounts for only a little over 5 percent of total output of the United Arab Emirates.
Governments of debt-laden Dubai and cash-strapped Bahrain are the most frequent Gulf Arab sovereign debt issuers, raising money from the markets on a regular basis.