Second Sukuk issuance of the year raises US$ 1.75 billion

26 September 2023 - The Islamic Development Bank ("IsDB") raised US$ 1.75 billion with its second 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 Programme. It was priced at par with a profit rate of 4.906%, payable on a semi-annual basis.

The Joint Lead Managers and Joint Bookrunners for this issuance were Barclays, BNP Paribas, Dubai Islamic Bank, First Abu Dhabi Bank, Islamic Corporation for the Development of the Private Sector, J.P. Morgan, Mizuho, NATIXIS and Standard Chartered Bank.

The proceeds of the issuance will be utilized by IsDB for sustainable development interventions in its Member Countries such as positive climate action, fighting food insecurity and building resilience. The interventions are guided by the fit-for-purpose Realigned Strategy of the Bank with a stronger focus on green, resilient, and sustainable infrastructure as well as inclusive human development.

The transaction was announced to the markets on Monday, 25 September, with Initial Price Thoughts (IPTs) set at 5Y US SOFR Mid Swap (MS) plus 57 basis points (bps) area. With a strong and over-subscribed order book, the Bank further tightened by 5 bps to finally land at 5Y US SOFR MS plus 52 bps, which translated into an overall profit rate of 4.906%.

In terms of the final allocation, the distribution was well diversified with 65% allocated to Middle East & North Africa, 19% to Asia, 15% to Europe and 1% to US Offshore and others. Overall, the deal witnessed strong participation from real money accounts and official institutions as well as a number of first-time investors, a testament of IsDB’s credit strength, as 58% was allocated to central banks and official institutions, 38% to bank treasuries, 3% to asset manager, fund managers and others and 1% to Corporates.

After pricing, Dr. Zamir Iqbal, the Vice President (Finance) and CFO of IsDB, said: “This issuance is another important milestone for us as we continue to build upon success of our prior Sukuk issuances and the growth of our robust balance sheet. We are grateful to IsDB’s Member Countries and all the investors for their trust in IsDB and its mission of sustainable development. We are also thankful to first-time investors who participated in this issuance and we welcome them as partners in sustainable development.”

Mr. Mohammed Sharaf, the IsDB Treasurer and Mr. Zakky Bantan, the Manager of the Capital Markets Division added, “We are very pleased to have executed the issuance in a volatile market backdrop. The massive investor response reaffirms their confidence in the Bank’s AAA-rated paper. We are thankful to them, especially the new ones, including the Central Bank community and Bank Treasuries. We would also like to thank the joint lead managers for their efforts in delivering a successful transaction.”

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