Islamic Development Bank places $1 billion sukuk

July 22, 2014 - 9:08:45 am

DUBAI: Jeddah-based Islamic Development Bank (IDB) issued $1 billion in five-year Islamic bonds, or sukuk, earlier this month, the largest ever privately-placed transaction from the supranational institution.

AAA-rated IDB is looking to increase the number of sukuk it sells, partly to raise its profile among international investors and to secure similar pricing levels to other development banks - which can borrow at lower rates.

The sukuk was priced on July 17 and carried a 1.8118 percent coupon at issue, underwritten by the IDB itself, according to Thomson Reuters data.

The deal follows a $100 million three-year private placement in April and a $1.5 billion five-year sukuk in February, the largest ever public issuance from the multilateral lender.

IDB usually prints one public transaction a year, with plans to issue a benchmark-sized around $500 million sukuk around May of next year.

The bank upsized its sukuk programme to $10 billion in December in part to cater to reverse inquiries, where an investor approaches an issuer with an offer to buy some of its debt.

IDB, which promotes economic development in Muslim countries and communities, has expanded its development efforts after more than tripling its authorised capital in 2012.

In June, IDB relaunched an infrastructure fund aiming to raise $2 billion, almost triple the size of the original fund;

In July, it seeded a sharia-compliant aircraft leasing fund together with Airbus Group. (Reuters)



 

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