UAE's Sharjah raises $550 million to boost coronavirus-hit economy

The UAE emirate of Sharjah has raised 2 billion dirhams ($550 million) after the issuance of Islamic loans to help bolster local businesses affected by the coronavirus crisis.

The third most populous emirate in the UAE, Sharjah has been hit hard by low oil prices and lockdown measures introduced to stop the spread of the novel coronavirus.

The 2 billion UAE dirham sukuk loan issuance by the local government will be used to "support the Sharjah economy" and has been managed by Sharjah Central Bank.

"The securities were issued under the Sharjah Liquidity Support Mechanism, a framework initiated by the government to enhance liquidity for the Sharjah banking system, and in co-operation with the Targeted Economic Support Scheme (Tess) of the Central Bank of the UAE," a statement read according to local media.

The issuance would likely be between $750 million and $1 billion, Reuters said on Tuesday.

S&P Global Ratings recently lowered Sharjah's credit rating to a "negative" rating, after recent economic disruptions.

Businesses in neighbouring Dubai have also been hit hard by the lockdowns with 70 percent of local businesses expected to go bust in the next six months.

The Central Bank of the UAE announced in April it has doubled to $70 billion a stimulus package to support the Gulf state's economy amid the coronavirus pandemic.