Ras al Khaimah (RAK) plans to sell two yen-denominated bonds worth a combined ¥15bn (Dh677.8m), according to a prospectus published on the London Stock Exchange.
The first ¥10bn yen bond will pay annual interest of 3.77 per cent and mature in 2040, according to the filing. The second bond will be sold for ¥5bn yen and will pay 3.58 per cent, maturing in 2030.
"Ras al Khaimah is seeking to diversify its revenue sources by leveraging its mineral resources and its strategic location in the Gulf and the Middle East as well as by focusing on the development of its tourism industry," said the prospectus.
RAK had Dh5.16bn (US$1.4bn) in consolidated outstanding loans by the end of last year, according to the prospectus. Some 25 per cent of the emirate's debt will mature by the end of this year, with the remaining 75 per cent maturing between next year and 2015.
The emirate's GDP accounts for about 1.9 per cent of the UAE's total GDP, with revenues of about Dh3.22bn as of last year.
Its existing credit ratings were recently affirmed by Standard& Poor's with an "A" long-term and "A-1" short-term sovereign credit rating, while Fitch has an "A" foreign default rating with a stable outlook. "In our opinion, the financial capacity of the UAE and the larger emirates, in particular Abu Dhabi, is ample to cover RAK's modest liabilities, with RAK's total debt estimated by S&P at around 36 per cent of the emirate's economic output at year-end 2009," said the credit agency.
RAK is not alone in the UAE in seeking to diversify sources of funding into currencies other than the dollar or the euro. The National Bank of Abu Dhabi has issued bonds in Australian dollars and sukuk in Malaysian ringgit in the past few months.
Abu Dhabi Commercial Bank has also borrowed in currencies including the South African rand and the Slovak koruna, according to the company's financial statements.
* with additional reporting by Gregor Stuart Hunter