The government of Ras al Khaimah, one of seven emirates making up the UAE, is planning a bond issue worth at least $500 million, a newspaper reported on Friday, citing banking sources.
Royal Bank of Scotland and Citigroup were among the arrangers for the "benchmark-size" bond issue, the daily Gulf News cited banking sources as saying.
A banker involved in the deal told Gulf News: "The government could be targeting a larger deal."
A government official in Ras al Khaimah, the UAE's most northern emirate, would not confirm plans for a bond issue but told Reuters the emirate was planning to reduce its debt towards the end of the year.
Without giving further details, the official said: "Ras al Khaimah is looking at a number of mechanisms to do so."
Ras al Khaimah has an A rating from Fitch and Standard & Poor's.
In May 2008, Ras al Khaimah announced an Islamic bond programme worth up to $2 billion to fund infrastructure projects and launched the first, $272 million tranche in the same month. Last year, the emirate issued another $400 million worth of sukuk.
The government of Dubai in September launched its first sovereign bond issue since a debt crisis that rattled investors a year ago, attracting healthy demand for the $1.25 billion on offer.