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IsDB’s Sukuk: First for 2023

The IsDB has issued its first public Sukuk for 2023 — a US$2 billion facility carrying a five-year tenor. NESSREEN TAMANO writes.

The multilateral bank priced the Islamic trust certificates, which were issued under the IsDB’s US$25 billion trust certificate issuance program, at par with a profit rate of 4.6%.

“The transaction was announced to the markets on Monday, 6th March, with initial price thoughts set at 5Y US SOFR Mid Swap (MS) plus 60 basis points (bps). With a strong and oversubscribed orderbook, the bank further tightened by 5bps to finally land at 5Y US SOFR MS plus 55bps, which translated into an overall profit rate of 4.598%,” the IsDB said.

Proceeds from the issuance will be used by the bank for its general corporate purposes, including extending project financing to its member countries for sustainable development such as food security, climate action and building resilience.

“This will be implemented under the fit-for-purpose Realigned Strategy of the bank with a sharper focus on green, resilient and sustainable infrastructure as well as inclusive human development.”

Mohammed Sharaf, the IsDB treasurer, and Zakky Bantan, the manager of the capital markets division, said: “We are delighted to have successfully closed the US$2 billion issuance despite looming headline risks and increasing market volatility. We are very thankful to all the investors, especially the new ones, especially the central bank community and bank treasuries who subscribed to our Sukuk for their confidence in IsDB’s ‘AAA’-rated paper.”

The IsDB last year raised a total of US$2.6 billion from two Sukuk issuances (one in April 2022 and another in October 2022), the proceeds from which went to supporting member countries’ recovery from the COVID-19 pandemic.

The multilateral bank has also been vocal about the role of green Sukuk in mobilizing climate finance resources, both from specialized funds and the private sector. During the first week of March 2023, the IsDB unveiled its Realigned Strategy to support its goal to drive green economy growth.

IsDB’s Sukuk US$2 billion7th March 2023
Issuer IsDB
Tenor Five years
Profit rate 4.6%
Payment terms Payable semi-annually
Joint lead managers and bookrunners BNP Paribas; Citi; Dukhan Bank; Emirates NBD; HSBC; the Islamic Corporation for the Development of the Private Sector; SMBC Nikko; Societe Generale; Standard Chartered Bank
Investor allocation Geographical breakdown: 70% MENA; 15% Asia; 8% Europe; 7% Africa and othersInvestor type: 62% central banks and official institutions; 37% bank treasuries; 1% fund managers, private banks and others

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