IsDB Issue Sukuk worth $1.7 bln

The Islamic Development Bank (IsDB), within the framework of the annual plan to mobilize financial resources, pricing its second and final year issuance for this year, at a value of $1.7 billion, with a maturity of five years and an annual return of 1.435%, within the bank’s medium-term sukuk program of $25 billion.

This issue is managed by Credit Agricole CIB, First Abu Dhabi Bank, HSBC, JP Morgan, KFH Capital (Kuwait Finance House Group), Natixis, SNB Capital (AlAhli Capital) and SMBC NCO Standard Chartered, and the Islamic Corporation for the Development of the Private Sector.

Proceeds from the issuance will be used to support the Bank’s development goals, which also include the broad response to financing the COVID-19 recovery in member countries.

The issuance received strong subscription requests from investors looking for high-quality investments with appropriate returns at the same time, and this was provided by the solid financial position and the high credit rating of the bank and its sukuk, while the high subscription requests contributed to reducing the final price by more than 16% from the levels of Initial pricing.

The official announcement of this offering was also made with an initial pricing margin in the range of 30 basis points (bps) above the average price of the swap contracts, and due to the high volume of subscriptions witnessed by the issuance, the final pricing was conducted the next day, at 25 basis points (i.e. a reduction of 5 basis points from initial pricing) and a total profit of 1.435%.

As for the distribution of final subscriptions, the issuance witnessed a good geographical diversification, as 39% were allocated to the Middle East and North Africa, 37% to Asia, 21% to Europe, and 3% to Africa.

In terms of the nature of the participating parties, central banks and government institutions constituted 60% of the shares.

The final investors, while the banks subscribed about 37% of the issue, and the investment funds represented about 3% of the total volume.

In general, the issue witnessed a good participation of new investors who had not previously subscribed to the bank’s sukuk.

The Sukuk will be listed in the Euronext Dublin and Nasdaq Dubai stock exchanges.

“Another issuance of Islamic Development Bank Sukuk has been successfully completed, and the Bank continues to mobilize market resources at low cost in order to finance the recovery of member countries from the pandemic, while we seek to make a green and sustainable recovery, and we are grateful to the investors community, for confirming their confidence in the Islamic Development Bank and its mission in sustainable social and economic development,” President of the Islamic Development Bank Dr. Muhammad Al-Jasser said, after the pricing process.