The new issue is expected to be worth about AED5.5bn ($1.5bn) and will go to market at about the same time as a $1bn securitisation that will be marketed privately to investors. Dirham liquidity is high in the region, while dollars have become prohibitively expensive for most local banks, leading to a shift to pricing deals in dirhams.

Dewa will decide on the size of the issue depending on market appetite.

Spreads on the deal will be closely watched after Dewa pulled its last attempt to tap the capital markets because the rate it was offered – 100 basis points over the London interbank offered rate (Libor) – was too high.

Other recent deals have come in at even higher margins. The emirate of Ras al-Khaimah recently priced a AED1bn ($272m) sukuk at the Emirates interbank offered rate (Eibor) plus 115 basis points, while a sukuk by Jebel Ali Free Zone that is yet to close has been priced at about Eibor plus 120 basis points.

A much larger issue of AED3.6bn by Dubai property developer Nakheel was priced at Eibor plus 225 basis points.

“The effect of the high pricing on the Nakheel sukuk has been to drag up pricing on other UAE deals,” says one banker.

The Ras al-Khaimah sukuk was predominately bought by Middle East investors.