Ras Al Khaimaih in $2bn bond issue

Ras al Khaimah has started marketing the second part of a US$2 billion (Dh7.34bn) Islamic bond programme, becoming the latest emirate to sell debt as investor sentiment improves in local capital markets. Officials from the emirate started meeting investors in the Middle East, Asia and Europe earlier this week to update them on its planned bond sale, according to a statement distributed by the lead managers of the sale, Standard Chartered and BNP Paribas.

The financial crisis has slowed RAK's plans to build thousands of new apartments and develop its tourism infrastructure through the construction of luxury resorts. RAK Properties, the emirate's largest property developer, did not make any sales in the first quarter, while other developers in the emirate have also delayed projects as the collapse in property prices has cut demand from investors. The planned bond sale is the latest sign of confidence returning to regional capital markets, which have remained all but shut after the collapse of Lehman Brothers last autumn. Banks have also been reluctant to lend as Gulf states have sought to attract investors through attractively priced bond programmes.

The sukuk market has been particularly badly hit as investors turned to safe haven investments such as US treasuries. Sukuk issuances more than halved last year to about $13.9bn. So far this year, sukuk worth $6.6bn have been sold. In April, Abu Dhabi set off the wave of new debt issues by regional governments and companies, raising $3bn. This was followed by more bond sales from Qatar, Bahrain and government-backed companies such as Mubadala Development, Abu Dhabi's investment arm, and the Tourism Development and Investment Company. In the past three months, state and corporate issuers have raised more than $8bn in the UAE alone.

In May last year, RAK sold sukuk worth Dh1bn. At the time it said it planned to set a benchmark for future dirham issuances in the emirate and to finance infrastructure development. RAK Ceramics, one of the world's largest tile makers and the emirate's largest manufacturing company, arranged a Dh200 million loan this week from Abu Dhabi Islamic Bank to help it meet its capital requirements and boost production.

RAK has an "A" rating from Fitch and Standard & Poor's. uharnischfeger@thenational.ae