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Wed 13 Aug 2014 11:45 AM

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Ras Al Khaimah sounds out banks for syndicated loan -IFR

Move casts doubt on whether a planned sukuk issue will now go ahead

Ras Al Khaimah sounds out banks for syndicated loan -IFR
Al Marjan Island, one of Ras Al Khaimahs major development projects.

Ras Al Khaimah has sent out requests for proposals
(RFPs) for a syndicated loan, according to three bankers, a move that casts
doubt on whether a planned sukuk issue will now go ahead.

The emirate sent RFPs for an Islamic bond deal in
June, around the same time that other GCC sovereigns, Sharjah and Bahrain, also
issued RFPs for potential bond deals.

Unlike its fellow sovereigns, however, Ras Al
Khaimah has yet to appoint banks.

The news that it is sounding out banks for a
syndicated loan has led some bankers to conclude that the sukuk transaction
would either be postponed or cancelled.

"I think they are going to focus on the loan
first. I would find it hard to believe that they would issue a sukuk and a loan
within the space of a few weeks," said one Dubai investment banker who has
received both RFPs.

"My personal view is that there were some
recent changes in the RAK IDO (Investment and Development Office), and perhaps
the new people who have come in have re-evaluated the financing plans," he

The IDO, which is in charge of the emirate's
financing plans, did not immediately respond to requests for comment.

Another Dubai-based banker agreed the sukuk deal
could either be postponed or cancelled altogether, but a third suggested that
the loan could be to fund a specific project and may not have any bearing on
the sukuk deal.

Ras Al Khaimah was last in international bond markets
in October 2013 with a $500 million, 3.297 percent five-year sukuk priced at a
spread of 175 basis points over mid-swaps.

Those levels were considered fairly tight at the
time - it priced inside the curve, according to leads - but it is trading even
better now at a Z-spread of 69 bps and a cash price of 104.27, according to

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