11 March 2018
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Sharjah Debt Update

Emirate of Sharjah credit profile update


By Emirates NBD Research


The Emirate of Sharjah is the third largest of the seven emirates that comprise the UAE. It is relatively a small emirate with population of 1.4 million, land area of 2590 sqkm (3.3% of the UAE total area) and GDP of $24 billion in 2016 (7% of UAE total).  GDP per capita is around $18k which is high in global terms but substantially lower than Abu Dhabi at $114k and Dubai at $81k.  Sharjah is rated A3/stable by Moody’s and BBB+/stable by S&P.

Sharjah’s debt as at end 2017 was circa $4.9 billion and debt to GDP was close to 20%. Its debt is well diversified across bonds, loans and sukuk and has weighted average maturity of over 4 years.  In end 2017, 55% of the debt was denominated in AED and 45% in USD. Bond documents have no stringent covenants of note.

The weighted average cost of borrowing was 3.2% as of the end of 2016, which is likely to have increased now in view of the ongoing interest rate hikes in the US. Sharjah debt management office actively manages interest rate risk and hedging is likely to have kept any rate increase contained.

Sharjah has 19 GREs (Government Related Entities) including Sharjah Electricity and Water Authority (SEWA), Sharjah International Airport, SIAF and Hamriya Free Zones, Sharjah’s seaports, two universities, Sharjah Public Transport Corporation, Sharjah Asset Management and Sharjah Waste Management Co. In addition to the government debt, there was $2.09 billion worth of net debt taken by the GREs. Government of Sharjah does not generally guarantee GRE debt, however exceptions are made based on specific requirements. Currently it guarantees USD 775 million of debt taken by the SEWA which matures in end 2019. Sharjah DMO (Debt Management Office) co-ordinates all borrowings by the Sharjah central government and de-centralised departments as well as government owned independent authorities.

Sharjah Debt

Source: Sharjah Finance Department, Emirates NBD Research

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Emirates NBD Research Research Analyst

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