Sharjah is offering investors an enticement that fellow emirate Dubai doesn’t as the sheikhdom gears up for its first Shariah-compliant bond sale this month: a credit rating.
The emirate, which is more than twice the size of New YorkCity, may price the debt to yield 2.5 percent to 3 percent if it’s a five-year issue, according to three fixed-income analysts surveyed by Bloomberg. That compares with a yield of about 2.66 percent on non-Islamic notes due 2019 for Dubai, which doesn’t carry a rating.
Sharjah’s A3 rating at Moody’s Investors Service, a grade four levels above junk, widens the pool of investors who can buy the debt, according to Samer Mardini at SJS Markets Ltd. Moody’s cited the emirate’s “strong” fiscal and government-debt position, which may appeal to some money managers in Asia and Europe whose fund rules prevent them from holding non-rated or below-investment-grade debt.
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