Ras al Khaimah, one of the seven members of the UAE, will price a $500 million five-year sukuk later on Tuesday, with heavy demand from investors helping it to reduce its borrowing costs.

The deal has been launched to price at 175 basis points over midswaps, at the tight end of the 175-180 bps final guidance issued earlier on Tuesday, a document from lead managers said.

That earlier guidance was well inside the initial price thought given on Monday of 200 bps over the same benchmark.

Pricing was able to be tightened after significant demand from investors, with order books for the Islamic bond in excess of $5 billion and no plan to increase beyond the planned $500 million size, the earlier update from lead managers said.

Last week, Turkey sold a $1.25 billion, five-year sukuk last week that was relatively tightly priced compared with its outstanding Islamic bond.

Abu Dhabi-based Al Hilal Bank, Citigroup, Dubai's Mashreq, National Bank of Abu Dhabi and Standard Chartered are arranging the sukuk for RAK, which is being issued through its Investment and Development Office. - Reuters