Islamic Bank issues $1.25bn Sukuk


The Islamic Development Bank (IsDB) has successfully priced a $1.25 billion, five-year Trust Certificates (Sukuk) under its $25 billion Trust Certificate Issuance Programme. The Sukuk was priced at par at 2.263 per cent, to be payable on semi-annual basis.
This issuance marked the bank's second benchmark issuance in 2016. IsDB continues to maintain ratings of Aaa/AAA/AAA by Moody's, S&P and Fitch (all stable outlook).
The joint lead managers and joint bookrunners were Boubyan Bank, Credit Agricole CIB, GIB Capital, J.P. Morgan, Mizuho Securities, National Bank of Abu Dhabi, NATIXIS, RHB Investment Bank Berhad and Standard Chartered Bank.
The bookbuilding process began last week with the release of the initial price thoughts of MidSwap rate (MS) plus 50 basis points (bps) area at the London Stock Exchange opening.
The deal was eventually priced at MS plus 45 bps, which resulted in a lower spread on top of the five-year MS rate compared with ISDB's March 2016 issuance, which was priced at MS + 50 basis points.
IsDB's ability to issue a sizeable benchmark in a volatile environment is a clear testament to its strong credit and financial position reaffirmed by its AAA ratings.
In terms of the final allocation, the distribution was well diversified with 72per cent allocated to the Middle East and North Africa (MENA) region, 25per cent to Asia and 3per cent to Europe, respectively.
Central banks and official agencies were allocated 90per cent followed by 10per cent to banks. Overall, the deal saw strong participation from money managers and official institutions, which showed confidence in IsDB's credit strength.
The Trust Certificates will be listed on the London Stock Exchange, NASDAQ Dubai and Bursa Malaysia (under the Exempt Regime). "We are very pleased with the outcome of the deal, which met our objectives for the transaction to continue building on the success of our prior deals," said Dr. Ahmet Tiktik, IsDB's Acting Vice President of Finance and Chief Financial Officer.
"I would like to thank IsDB's member countries and other investors for their continuous support and commend the lead managers for delivering a deal that fully met our objectives.
We hope that this further IsDB funding will continue to contribute towards extending bigger financing to our member countries to support their developmental needs."
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