RAK orderbook down from previous sukuk as airline crash impacts Emirates sukuk

Ras Al Khaimah Sukuk

This is Ras Al Khaimah’s first sukuk issuance since October 2013, when the UAE emirate of Ras Al Khaimah sukuk was priced at 3.297% (MS+175bps) with a total of USD500m which garnered orders over USD5bn, which represents much stronger demand than the currently launched 10y sukuk.

Emirates Sukuk

Also launching this week was the Emirates airlines sukuk which is to fund the orders for A380-800, as Emirates seeks USD107.5bn worth of aircrafts from Boeing and Airbus. This is the first time for UK Export Finance (UKEF) to guarantee a sukuk.

This weeks Germanwings crash as well as subdued demand, intense competition (from low cost carriers), and overcapacity issues may dampening market’s sentiment for the airline sector.

Reproduced with permission from RHB Global Sukuk Markets Research, Kuala Lumpur, Malaysia