The Islamic Development Bank (IsDB), rated Aaa/AAA/AAA by Moody’s, S&P and Fitch (all stable outlook), has successfully priced its debut EUR Denominated issuance amounting to EUR 650 million, 5-year Trust Certificates (Sukuk) under its US$25 billion Trust Certificate Issuance Programme. Following the success of the issuance, the IsDB plans to become a frequent issuer in the EUR Space going forward.
The bookbuilding process began on Tuesday, 30 October with the release of the initial price thoughts of 5 year EUR Mid Swap (MS) plus 20-25 basis points (bps) area at London opening. The strong demand from investors allowed IsDB to set the guidance at MS + 22 bps range at London Open the next day (with IoIs exceeding EUR 400 million). The deal was eventually priced on Wednesday, 31st October at MS plus 20 bps, which resulted in the issuance of IsDB's Debut EUR 5 year Sukuk amounting to EUR 650 million, an upsize from original target of 500 million, which was in order to accommodate real money demand and the Sukuk was priced at par at 0.554%, to be payable on annual basis. This issuance marked the Bank’s third benchmark issuance in 2018 (a first time since the Bank's inception).
Overall orders almost reached EUR 700 million from 30 investors (the same exact number of investors in the last US$ Sukuk Issuance). The majority of orders came from central banks and official institutions. There was also significant demand from bank treasuries, asset managers, and pension funds Europe.
The issuance witnessed first time investors from Austria, Finland, France, Germany and Netherlands.
In terms of the final allocation, the distribution was well diversified with 43% allocated to MENA, 20% to Asia, 29% to Europe (highest) and 8% others respectively. Overall the deal saw strong participation from real money accounts and official institutions providing credence to IsDB’s credit strength. 64% was allocated to central banks, followed by 17% to banks, 20% to Pension funds and fund managers.
The Trust Certificates will be listed on the London Stock Exchange, NASDAQ Dubai and Bursa Malaysia (under the Exempt Regime).