Jeddah (UNA-OIC) – The Islamic Development Bank (IsDB) raised US$ 1.7 billion with its latest public Sukuk issuance of the year.
The Bank, rated Aaa/AAA/AAA by Moody’s, S&P and Fitch (all 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 1.435%, payable on a semi-annual basis.
The Joint Lead Managers and Joint Bookrunners for this issuance are Credit Agricole CIB, First Abu Dhabi Bank, HSBC, JP Morgan, KFH Capital, Natixis, SNB Capital, SMBC Nikko, Standard Chartered and the Islamic Corporation for the Development of the Private Sector (ICD).
The proceeds of the issuance will be utilized for the development mandate of the Bank, which also include its wide-ranging response to financing the recovery from the pandemic for its Member Countries.
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 AAA ratings. Due to the high demand, the Bank was able to tighten the pricing by more than 16% between announcement and closing.
The transaction was announced to the markets on Tuesday, 12 October 2021. The Initial Price Thoughts (IPTs) were set at Mid Swap (MS) plus 30 basis points (bps) area and released on the next day. With A very strong demand from investors, the deal was eventually priced at MS plus 25 bps, tightening by 5 bps, with an overall profit rate of 1.435%, with no new issue concession.
In terms of the final allocation, the distribution was well diversified with 39% allocated to the Middle East & North Africa, 37% to Asia, 21% to Europe, and 3% to Africa.
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 60% was allocated to central banks and official institutions, 37% to bank treasuries and 3% to fund managers, private banks and others.
The Trust Certificates will be listed on Euronext Dublin and NASDAQ Dubai.
Following the pricing, President of IsDB Dr. Muhammad Al Jasser stated: “With another successful Sukuk issuance, IsDB continues to mobilize market resources at a low cost in order to finance the recovery of its Member Countries from the pandemic, which is aimed to be a green and resilient recovery. We are very thankful to the investor community for reaffirming their confidence and trust in IsDB and its mission of sustainable social and economic development.”
Dr. Zamir Iqbal, the Vice President (Finance) and CFO of IsDB, remarked: “This is another landmark Sukuk issuance for us as we continue to support our Member Countries with much needed cost-effective financing amid the pandemic. We are thankful to the wide range of investors, especially the new investors who participated in this transaction for their faith in our AAA-rated paper, which provides best-in-class risk-adjusted returns with a development impact.”
Mohamed Hedi Mejai, Acting Director, Treasury Department of IsDB, said: “We are very pleased with the size of the transaction, lower credit spread, and robust order book that demonstrated investors’ confidence in IsDB credit, for which we are grateful, especially to our anchor investors. Having first-time investors participate in this issuance is also very encouraging as these are the results of years of efforts to raise more awareness of the Sukuk instrument in the global capital markets. I would also like to thank the joint lead managers for their diligent support to the transaction.”
Søren Elbech, the Global Head of Supranational Institutions at J.P. Morgan said: “Today’s transaction is an exceptional outcome for IsDB to conclude its funding exercise in a year that has been categorized with many landmark transactions. With its lowest spread in more than 7 years as well as an upsized transaction, it’s an excellent result for IsDB that we, at J.P. Morgan, are very pleased to have played a leading role in.”
Salman Ansari, Managing Director, Head of Capital Markets, West, Standard Chartered, said: “IsDB has made significant strides over the years to enhance its credit positioning and value proposition in global markets, which has resulted in a broader appreciation of IsDB’s AAA ratings and HQLA Level 1 status. This is evidenced by an increasing number of high-quality SSA investors subscribing to IsDB paper which in turn has resulted in optimal pricing and liquidity.”
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.