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Sharjah’s Arada Developments set to raise $350m with debut sukuk

Masaar, Sharjah’s forested megaproject, featuring 4,000 villas and townhouses. Image: Arada Developments

Arada Developments, the largest developer in Sharjah in the United Arab Emirates, was set to raise $350 million in its debut foray in the debt markets, a document showed on Tuesday.

The yield was set at 8.12 percent, tightening from initial price guidance of around 8.25 percent. The Islamic bonds, or sukuk, received more than $720 million in orders, including $185 million in interest from joint lead managers, the document from one of the banks on the deal showed.

The company had said the sukuk would be of benchmark size, which usually means at least $500 million.

The issuance is the first public dollar bond sale out of the Gulf since late March, when the Sharjah government raised $750 million, also with sukuk.

The region has seen a dearth of bond sales this year amid enduring market volatility and as many issuers turn to loans.

Arada is 40 percent owned by Basma Group, which is owned by Sharjah’s deputy ruler, and 60 percent by Corp KBW Investments, which is owned by Prince Khaled bin Alwaleed bin Talal Al Saud, a member of the Saudi royal family.

The company touted “proven support from the government and regulatory authorities” in a presentation for investors viewed by Reuters. That included a guarantee for a loan of up to $436 million, flexible payment plans and premium land allotment, the presentation said.

Dubai Islamic Bank, Emirates NBD Capital and Standard Chartered Bank are joint global coordinators. They are joined by Abu Dhabi Commercial Bank , Ajman Bank, Al Rajhi Capital, Kamco Invest, Mashreq, Sharjah Islamic Bank and Warba Bank as joint lead managers and bookrunners, the document from one of the banks showed.

Last week, UAE capital Abu Dhabi raised $300 million by tapping two existing bonds, due in 2026 and 2027, both with coupons of 3.125 percent. HSBC was the sole lead manager and bookrunner.