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Sunday, December 10, 2023

Launch Partners

Case study: IsDB’s Sukuk: Funding sustainable development in member countries

The IsDB has issued its second public Sukuk issuance of 2023, raising US$1.75 billion to fund sustainable development projects in its member countries. NESSREEN TAMANO has the story.

The multilateral bank successfully priced the five-year trust certificates under its US$25 billion trust certifcate issuance program, at par with a profit rate of 4.91%. The Islamic paper is payable on a semi-annual basis.

The Sukuk received an oversubscribed orderbook, and witnessed participation from real money accounts and official institutions, as well as a number of first-time investors.

In terms of geographical distribution, 65% was allocated to MENA, 19% to Asia, 15% to Europe and 1% to US offshore investors and others. The investor pool consisted of 58% central banks and official institutions, 38% bank treasuries, 3% asset and fund managers and others, and 1% corporates.

Proceeds from the issuance will be used by the IsDB for sustainable development interventions such as positive climate action, fighting food insecurity and building resilience.

“The interventions are guided by the fit-for-purpose ‘Realigned Strategy’ of the bank with a stronger focus on green, resilient and sustainable infrastructure as well as inclusive human development,” the IsDB said in a statement.

The mandated joint lead managers and joint bookrunners for the transaction were Barclays, BNP Paribas, Dubai Islamic Bank, First Abu Dhabi Bank, the Islamic Corporation for the Development of the Private Sector, JPMorgan, Mizuho, NATIXIS and Standard Chartered Bank.

“We are very pleased to have executed the issuance in a volatile market backdrop. The massive investor response reaffirms their confidence in the bank’s ‘AAA’-rated paper. We are thankful to them, especially the new ones, including the central bank community and bank treasuries,” said Mohammed Sharaf, the IsDB treasurer, and Zakky Bantan, the manager of the capital markets division.

The IsDB issued its first public Sukuk for 2023 in March: a US$2 billion facility carrying a five-year tenor that was also oversubscribed.

The multilateral bank has been vocal about the role of green Sukuk in mobilizing climate finance resources, and has this year started discussions with the French government to explore green Sukuk opportunities, and with the International Committee of the Red Cross for the possibility of a humanitarian Sukuk facility to address humanitarian crises in IsDB member countries.

IsDB’s Sukuk
US$1.75 billion
26th September 2023
TenorFive years
Profit rate4.91%
Payment termsPayable semi-annually
Joint lead managers and bookrunnersBarclays; BNP Paribas; Dubai Islamic Bank; First Abu Dhabi Bank; Islamic Corporation for the Development of the Private Sector; JPMorgan; Mizuho; NATIXIS; Standard Chartered Bank
Geographical allocation65% MENA; 19% Asia; 15% Europe; 1% US offshore and others
Investor pool58% central banks and official institutions; 38% bank treasuries; 3% asset and fund managers and others; 1% corporates
  • Companies in the Article
  • IsDB

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