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Tuesday, October 4, 2022

Launch Partners

IsDB’s sustainability Sukuk: The bank’s largest Sukuk to date

The IsDB topped its successful sustainability Sukuk debut last year with its sophomore paper of the same kind, this time also the bank’s largest-ever US dollar-denominated public issuance. NESSREEN TAMANO reports.

Parked under the IsDB’s US$25 billion trust certificate issuance program, the follow-up US$2.5 billion sustainability Sukuk facility issued in March 2021 was priced with a profit rate of 1.26%. The Islamic paper is also the multilateral’s first public issuance this year.

The Islamic paper attracted real money and first-time investors, and its distribution was diverse — 78% was allocated to central banks and official institutions, 18% to bank treasuries and 4% to fund managers, private banks and others. In terms of geographical makeup, 61% was allocated to the MENA region, 24% to Asia, 13% to Europe and 2% to others, including US offshore accounts.

“The quality of the orderbook and broad-based demand from investors warranted a 6bps move for a final spread of MS+33bps, one of (the IsDB’s) tightest historical prints,” Maude Le Moine, the head of sovereign, supranational and agency debt capital markets at Goldman Sachs International, said.

Dr Zamir Iqbal, the vice-president (finance) and CFO of the IsDB, who said that the Sukuk is a continuation of the bank’s COVID-19 response efforts, added: “The lower cost of funding will enable the IsDB to extend better financing terms to our member countries for supporting their critical needs during and post-pandemic. We are also very pleased to see new investors participating in the Sukuk.”

Around 10% of the Sukuk proceeds will be used to finance green projects while 90% will go to social development projects, which are both eligible under the IsDB’s Sustainable Finance Framework. The framework itself was created in line with the Green Bond Standards, Social Bond Standards and Sustainability Bond Guidelines published by the International Capital Market Association.

“As the world continues to find better ways to respond to the ongoing pandemic, the IsDB is proudly leading with its role of mobilizing critically needed resources at a low cost for its member countries in order to finance a green and resilient recovery. This is our second sustainability Sukuk and also our largest issuance ever, once again reaffirming the demand for financing promoting sustainability in a world stricken with climate emergency as well as a raging pandemic,” Dr Bandar Hajjar, the president of the IsDB, stated.

The bank issued its first-ever sustainability Sukuk worth US$1.5 billion in June 2020 — a follow-up to its landmark green Sukuk issued in November 2019 that raised EUR1 billion (US$1.18 billion).

IsDB’s sustainability Sukuk
US$2.5 billion

25th March 2021
IssuerIsDB
Profit rate1.26%
TenorFive years
Payment termsPayable semi-annually
Joint lead managers and bookrunnersCiti, HSBC, Goldman Sachs International, NATIXIS, Societe Generale, Standard Chartered Bank, Warba Bank
Co-managerKuwait International Bank
Rating‘AAA’ by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings
ListingEuronext Dublin and NASDAQ Dubai

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