The Islamic Development Bank ("IsDB"), rated Aaa/AAA/AAA by Moody’s, S&P and Fitch (all stable outlook), has successfully priced a US$1.5 billion, 5-year Trust Certificates (Sukuk) under its US$25 billion Trust Certificate Issuance Programme. The Sukuk was priced at par at 2.843%, to be payable on semi-annual basis, marking IsDB’s first public issuance in 2019.

The Joint Lead Managers and Bookrunners for this issuance are Crédit Agricole CIB, First Abu Dhabi Bank, Emirates NBD Capital, Gulf International Bank, HSBC, J.P. Morgan, NATIXIS, and Standard Chartered Bank.

The mandate was announced on April 10th, with the roadshow starting on April 15th in London and ended on April 17th. The book-building process began on Tuesday, April 16thwith the release of the initial price thoughts of Mid Swap (MS) plus mid to high 40 basis points (bps) area at UK opening. The strong demand from investors allowed IsDB to set the guidance at MS+45 bps area the following day. The deal was eventually priced at MS plus 40bps, with overall lower profit rate compared to IsDB’s Sep 2018 issuance which had the profit rate of 3.389%.

The ability of IsDB to issue a sizeable benchmark with price inside its secondaries level with more than 22% allocated to new investors is a clear testament to IsDB’s strong credit and financial position, reaffirmed by its AAA ratings. The deal has also witnessed an increase in the number of investors by 15% compared to the last US$ public trade in September 2018, in addition to an increase in the size of issuance to US$ 1.50 billion from an average of $1.25 billion in the last three years. 

In terms of the final allocation, the distribution was well diversified with 82% allocated to EMEA, 17% to Asia, and 1% to others, respectively. Overall the deal saw strong participation from real money accounts and official institutions providing credence to IsDB’s credit strength, 80% was allocated to central banks and official institutions, and 20% to bank treasurers and fund managers.
 
The Trust Certificates will be listed on the London Stock Exchange, NASDAQ Dubai and Bursa Malaysia (under the Exempt Regime).
 
Dr. Zamir Iqbal, the Vice President, Finance, and CFO of IsDB, commented: We are very pleased with the outcome of the deal which met our objectives for the transaction to continue building on the success of our prior deals, and we are also happy to see new investors subscribing in the Sukuk. We will continue the hard work to achieve even better results in the future, such as achieving lower overall pricing for Sukuk. I would like to thank the IsDB’s member countries and other investors for their continuous support which has further strengthened our relationship and commend the lead managers for delivering a successful deal that fully met our objectives. We hope that this funding will continue to contribute towards extending better financing terms to our member countries to support their developmental needs.”

IsDB is a multilateral development financial institution with 57 Member Countries and a mandate of delivering social and economic development in Member countries and Muslim communities worldwide. IsDB plans to raise between US$4 - US$5 billion from the capital markets in 2019.