8 May 2024 - The Islamic Development Bank ("IsDB") raised US$ 2 billion with its first benchmark public Sukuk issuance of the year.

The Bank, rated Aaa/AAA/AAA by S&P, Moody’s and Fitch (all with Stable Outlook) successfully priced the 5-year Trust Certificates under its US$25 billion Trust Certificate Issuance Programme. It was priced at par with a profit rate of 4.754%, payable on a semi-annual basis.

The Joint Lead Managers and Joint Bookrunners for this issuance were Citi, Crédit Agricole Corporate and Investment Bank, DBS Bank Ltd., Dubai Islamic Bank, HSBC, ICBC, NATIXIS, Sharjah Islamic Bank, SNB Capital and Standard Chartered Bank.

The proceeds of the issuance will be utilized by IsDB for sustainable development interventions in its Member Countries. The Bank, which is celebrating its Golden Jubilee this year, has a comprehensive mandate of delivering sustainable socio-economic development in its 57 Member Countries and Muslim communities worldwide. This includes developmental projects geared towards poverty alleviation, 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 Sukuk transaction was announced to the markets on Tuesday, 7 May, with Initial Price Thoughts (IPTs) set at 5Y US SOFR Mid Swap (MS) plus 55 basis points (bps) area. On the back of an over-subscribed orderbook, the Bank revised the guidance to 5Y US SOFR Mid Swap (MS) plus 53 bps, and further tightened it by 3 bps on Wednesday, 8 May, to finally land at 5Y US SOFR MS plus 50 bps, translating into an overall profit rate of 4.754%.

In terms of the final allocation, the distribution was well diversified with 58% allocated to Middle East & North Africa, 17% to Asia, 16% to Europe and 9% to US Offshore and others. Overall, the deal witnessed strong participation from real money accounts and official institutions as well as a number of first-time investors, a testament of IsDB’s credit strength, as 60% was allocated to central banks and official institutions, 35% to bank treasuries, 5% to asset managers and fund managers.

After pricing, Dr. Zamir Iqbal, the Vice President (Finance) and CFO of IsDB, said: “This year, we are celebrating 50 years of the Bank’s service to its 57 Member Countries and we are proud to have executed, yet again, a benchmark issuance with strong investor response for our first public issuance of the year. We will continue to build on this momentum with our growing balance sheet. We are very grateful to IsDB’s Member Countries and all the investors, including new ones, for their trust in IsDB and its mission of sustainable development around the world.”

Mohammed Sharaf, IsDB Treasurer added, “We are pleased to have brought a benchmark deal to the market in a challenging environment. This would not have been possible without the positive response from investors and the efforts of the joint lead managers on the trade. We look forward to returning to the markets later in the year to achieve our annual funding program.”