IsDB Raises US$ 1.6 billion with its First Sukuk Issuance of 2022

Jeddah, Kingdom of Saudi Arabia, 21 April 2022 - The Islamic Development Bank (IsDB), comprising 57 Member Countries across 4 continents, has raised US$ 1.6 billion with its first public Sukuk issuance of the year.

The Bank, rated Aaa/AAA/AAA by S&P, Moody’s and Fitch (all with Stable Outlook) successfully priced the 5-year Trust Certificates under its US$25 billion Trust Certificate Issuance Program. It was priced at par with a profit rate of 3.213%, payable on a semi-annual basis.

The Joint Lead Managers and Joint Bookrunners for this issuance are Citi, Dubai Islamic Bank, HSBC, KFH Capital, NATIXIS, SMBC Nikko, Société Générale, SNB Capital and Standard Chartered Bank.

This is also IsDB’s first public Sukuk issuance based on the SOFR Mid-Swap benchmark, the new global benchmark rate that is being adopted by SSA issuers for pricing fixed rate instruments.

The proceeds of the issuance will be used to finance projects under the development mandate of the Bank, which targets poverty alleviation, human development, sustainable agriculture, transport, education, health and water infrastructure, climate action, among others, in its Member Countries. It also covers initiatives to support the Member Countries’ recovery from the pandemic.

The issuance attracted very strong demand from real money investors looking for both quality and value and this was validated by IsDB’ s robust credit and financial position and reaffirmed by its top-tier AAA ratings.

The transaction was announced to the markets on Wednesday, 20 April, and the Initial Price Thoughts (IPTs) were set at 5Y US SOFR Mid Swap (MS) plus 60 basis points (bps) area. Due to substantial investor demand for high quality paper, the Bank was able to land at 5Y US SOFR MS plus 50 bps, tightening by more than 16% between initial announcement and closing. This translated into an overall profit rate of 3.213%, with no new issue concession incurred.

In terms of the final allocation, the distribution was well diversified with 63% allocated to Middle East & North Africa, 25% to Asia, and 12% to Europe. Overall, the deal witnessed strong participation from real money accounts and official institutions as well as a number of first-time investors, a testament to IsDB’s credit strength, as 68% was allocated to central banks and official institutions, 28% to bank treasuries and 4% to fund managers, private banks and others.

The Trust Certificates will be listed on Euronext Dublin and NASDAQ Dubai.

Following the pricing, IsDB President, Dr. Muhammad Al Jasser, stated that the Bank is very pleased to have successfully closed its first Sukuk issuance of the year, especially in the context of the state of the current global markets. He said: “As IsDB continues to support the full recovery of its Member Countries from the pandemic, mobilizing market resources through Sukuk remains a core component of our strategy. We are very thankful to the investor community for placing their trust in IsDB’s mission of sustainable social and economic development.”

Vice President (Finance & Administration) and CFO of IsDB, Dr. Zamir Iqbal, remarked: “The landmark issuance helps us to maintain momentum for leveraging on the Sukuk instrument to raise capital for the pressing socio-economic development needs of our Member Countries who are still recovering from the aftermath of the pandemic. We would like to record our gratitude to all investors, especially the new ones who participated in this transaction for their consistent faith in our AAA-rated paper, which not only provides best-in-class risk-adjusted returns but also a strong development impact on the ground in our Member Countries. We look forward to their continued support when we return to markets later in the year.”

Acting Director, Treasury Department of IsDB, Mohamed Hedi Mejai, said: “We are pleased to have achieved the milestone of the first Sukuk issuance of the year, especially in terms of size, credit spread and a very strong orderbook. We are very grateful to our investors, especially our anchor investors, who reaffirmed their confidence in IsDB credit. We are delighted to have new investors participate in this transaction and we will continue our efforts to raise more awareness of the Sukuk instrument in new regions to further expand our investor base. I would like to thank the Treasury team as well as the joint lead managers for their extensive efforts for delivering a successful transaction.”

IsDB is a multilateral development financial institution with 57 Member Countries and a mandate of delivering social and economic development in Member Countries and Muslim communities worldwide.