(Bloomberg) --
Sharjah's government has picked banks to raise over $750 million from an Islamic bond offering, drawn by historically low funding costs as its finances come under strain.
A sale could happen as soon as the coming days, people familiar with the matter said, asking not to be identified as the matter is private. A representative for the government of Sharjah declined to comment.
The third-biggest sheikhdom in the United Arab Emirates is facing another year of fiscal deterioration after the coronavirus pandemic cut into revenue and forced the local government to spend more to support the economy. The budget could be in the red through 2024, according to S&P Global Ratings, which forecasts the deficit will surge past 10% of gross domestic product this year.
Developing nations are in a rush to borrow before a summer vacation lull crimps activity and tighter central bank policy lifts yields.
The pace of deals from the Middle East has also quickened, with Qatar Petroleum raising $12.5 billion last week in this year's biggest emerging-market bond sale. In recent weeks, Saudi Aramco raised $6 billion in a three-tranche bond offering while Turkey, Kenya and Oman also tapped the debt market.
Sharjah carries the lowest investment-grade rating at S&P and Moody's Investors Service.
S&P in April affirmed the emirate's debt score with a stable outlook, expecting net general government debt will remain below 60% of GDP through 2024 even as it runs large fiscal deficits. It forecasts Sharjah's economic growth will rebound by 4% this year after a contraction of about 10% in 2020.
©2021 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
