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Tuesday, October 4, 2022

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IsDB’s Sukuk: Driving the green agenda

The IsDB has closed its first-ever green Sukuk, the Jeddah-based multilateral development bank and supranational’s third public issuance in 2019, reaffirming its commitment to using Islamic finance to support green projects. NESSREEN TAMANO has the details.

The EUR1 billion (US$1.11 billion), five-year trust certificates were raised under the IsDB’s US$25 billion Trust Certificate Issuance Program and priced at par with a mid swap plus 28bps, with an overall profit rate of 0.037% – the lowest ever profit rate for a euro issuance by the bank. Payable on an annual basis, the facility will be used for a range of climate change and green development projects in IsDB’s 57 member-countries. These include projects on renewable energy, clean transportation, energy efficiency, pollution prevention and control, the environmentally sustainable management of natural living resources and land use, and sustainable water and wastewater management.

The facility, which is also the first-ever ‘AAA’-rated green Sukuk in the global capital markets, recorded strong global participation from a diverse group, including bank treasuries, fund managers, private banks, central banks and official institutions. The Sukuk issuance is listed on Euronext Dublin, NASDAQ Dubai and Bursa Malaysia (under the Exempt Regime), and is rated ‘Aaa’ by Moody’s, ‘AAA’ by S&P and ‘AAA’ by Fitch, all with a stable outlook.

Citi, First Abu Dhabi Bank, HSBC, Landesbank Baden-Württemberg, Natixis, Société Générale, Warba Bank, and Standard Chartered Bank acted as the joint lead managers and joint bookrunners for the issuance.

Dr Bandar Hajjar, the president of the IsDB, said: “With this landmark green Sukuk, IsDB has reaffirmed its longstanding commitment to play a catalytic role in efficiently mobilizing resources for core Sustainable Development Goals (SDG) sectors in our member countries, thereby helping them to progress towards achieving the SDGs.”

The landmark issuance was announced at the IsDB Sukuk Summit in Luxembourg in November 2019, and is based on the IsDB’s recently introduced Sustainable Finance Framework, which is in line with the IsDB President Five-Year Program to attract socially responsible and environmentally conscious investors to finance SDGs in IsDB member-countries.

Summary of Terms and Conditions
IssuerIsDB
Size of issueEUR1 billion (US$1.11 billion)
StructureTrust certificates
PurposeGreen development projects in 57 IsDB member countries
TenorFive years
Profit rate0.037%
CurrencyEuro
Joint lead managersCiti, First Abu Dhabi Bank, HSBC, Landesbank Baden-Württemberg, Natixis, Société Générale, Warba Bank and Standard Chartered Bank
AllocationGeographical: 51% to the Middle East and North Africa; 28% to Europe; 6% to Asia; and 5% to others
Institutional: 61% to bank treasuries, fund managers and private banks; 39% to central banks and official institutions
Rating‘Aaa’ by Moody’s; ‘AAA’ by Fitch; ‘AAA’ by S&P

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