The Islamic Development Bank (IsDB) has mobilized USD 1.2 billion through a benchmark Sukuk issuance in the capital markets.
The transaction was successfully issued amidst a volatile market period, demonstrating IsDB’s long standing presence and strength in the US$ Sukuk market.
The Bank, rated Aaa/AAA/AAA by S&P, Moody’s and Fitch (all with Stable Outlook) priced the 5-year Trust Certificates under its US$25 billion Trust Certificate Issuance Programme.
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The Sukuk transaction is the Bank’s second USD benchmark issuance this year, following significant milestones achieved in 2024 that saw three successful public benchmark transactions across the Euro and USD markets and the Bank crossing the US$ 50 billion mark in total Sukuk issuances since it started issuing in 2003.
The Joint Lead Managers for this issuance wereBBVA, BMO Capital Markets, Citi, Emirates NBD Capital, Goldman Sachs International, NATIXIS, Societe Generale and Standard Chartered Bank.
The Sukuk proceeds will be utilized to continue the Bank’s support for project financing that delivers socio-economic growth across its 57 Member Countries and Muslim communities globally.
The 5-year Sukuk transaction was announced to the market on Monday, 16 June, with Initial Pricing Thoughts (IPTs)at US SOFR Mid Swap (SOFR MS) plus 58 basis points (bps) area.Despite the competing supply from peers across tenors, and the heightened geopolitical crises, the investor demand was supportive from the outset resulting in the strong Indications of Interest (IOIs)thatexceeded USD 1.35 billion.
The orderbook officially opened the following morning, on Tuesday, 17 June, with guidance reiterated at SOFR MS plus 58bps area. Investor orderscontinued to grow and held onto the orderbook, allowing the Bank to set the final spread at SOFR MS plus 57 bps, translating into an overall profit rate of 4.246%payable on a semi-annual basis and priced at par. The high-quality investor base enabled the Bank to upsize the transaction from an initially planned USD 1.0 billionto US$ 1.2 billion.
The transaction attracted strong participation from Central Banks and OfficialInstitutions accounting for 59% of the book, followed by Bank Treasuries and Private Banks with 35% and Asset/FundManagers 6%. The Bank’s investor marketing activities and credit standing was once again rewarded with participation by new investors who invested for the first time.Final allocations were very well diversified, with 45% from the Middle East and North Africa, 34% from the UK and Europe, 20% from Asia and 1% from Offshore US.
Dr. Zamir Iqbal, the Vice President (Finance) and CFO of IsDB, said: “Despitea particularly volatile market, we are extremely pleased with the successful close of our latest Sukuk issuance, which was upsized from US$1bn to US$1.2bn. This outstanding result is a testament to the strong confidence investors have in IsDB’s creditworthiness and our vital mission to foster sustainable development across our member countries. The proceeds will be instrumental in funding our strategic initiatives and supporting impactful projects globally.”
Mr. Mohammed Sharaf, the IsDB Treasurer and Mr. Zakky Bantan, the Manager of the Capital Markets Divisionadded,“Our agile approach and the active and continuous engagement with investors has proven fruitful for a strong execution in these market conditions and achieving 80% of the Bank’s funding program for the year.Our sincere thanks go to all investors for their unwavering trust and to the joint bookrunners for their meticulous efforts in bringing this endeavor to fruition.”
IsDB is a AAA-rated supranational and multilateral development financial institution with 57 Member Countries (MCs) and a mandate of delivering social and economic development with a focus on sustainability in its Member countries and Muslim communities worldwide.
The Bank’s operations span across four continents, touching the lives of nearly 1 in 5 of the global population. Its mission is to equip people to drive their own economic and social progress at scale, putting the infrastructure in place and enabling them to fulfil their potential. The Bank’s targeted efforts across multiple continents foster an environment where the primary focus is on human development and well-being.
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