Moody's rates Sharjah sukuk A3

Moody's Investors Service said it assigned a provisional A3 rating to the proposed dollar trust certificates to be issued by Sharjah Sukuk Ltd., a special-purpose vehicle established in the Cayman Islands by the Emirate of Sharjah. The payment obligations associated with these certificates are direct obligations of the emirate, which has an A3 government bond rating and stable outlook.

The agency said the credit strength of the emirate is supported by its very strong fiscal and government debt position and, aided by a competitive manufacturing sector, the relatively higher degree of economic diversification compared to the rest of the United Arab Emirates and countries in the Gulf Cooperation Council.

However, given the small size of the emirate's economy and its economic linkages with the rest of the United Arab Emirates, Sharjah is exposed to macroeconomic volatility, and institutional weaknesses are also manifested in a low degree of transparency from a statistical system that has limited coverage of economic data, Moody’s said.

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