Jeddah,May29,2013 : The Islamic Development Bank (IDB), rated AAA by Moody’s, S&P and Fitch (all stable outlook), has successfully priced USD $1 billion, 5-year, fixed-rate Trust Certificates (Sukuk) issued at par with a 1.535% semi-annual profit rate under its outstanding US$ 6.5 billion Trust Certificate Issuance Program.
Standard Chartered Bank acted as Global Coordinator for the issuance with Barwa Bank, CIMB, Credit Agricole CIB, Natixis, National Bank of Abu Dhabi, NCB Capital, the Royal Bank of Scotland and Standard Chartered Bank acting as joint lead managers and joint bookrunners on the transaction and Bank of London and The Middle East PLC as co-lead manager on the transaction
Bookbuilding began on Tuesday, May 28 with the release of official price guidance in the MS + high 30’s bps context. This ensured good momentum in the bookbuilding process which led to the orderbook reaching approximately USD $1.5 billion across a diverse range of high-quality orders, including international institutional investors from non-member countries.
Despite uncertainty around the state of the global macroeconomy, the transaction attracted strong interest and allowed the IDB to achieve extremely attractive pricing, at levels much tighter compared to past issuances.
The deal priced approximately 20 bps inside the secondary market levels to result in the lowest spread over mid-swaps ever achieved by the Bank for a public USD-denominated Sukuk transaction. This achievement is a clear outcome of its continuing efforts to position itself closer to its supranational peers.
The success of the transaction was underpinned by a comprehensive set of investor meetings covering key hubs in Asia, the Middle East and Europe. The Islamic Development Bank’s AAA ratings, strong stand-alone credit profile and commitment to supporting the secondary-market liquidity of its Sukuk paper, makes for a compelling investor story.
The issue saw strong participation from Asia and the Middle East and North Africa region, in addition to participation by new investors domiciled in Europe. In terms of allocations, the geographic split stood roughly at 50% for MENA, 25% for Asia, 23% for Europe, and 2% Americas.
Overall the deal saw extensive participation from real money accounts and official institutions such as Central Banks and other Supranationals, providing confirmation of the IDB’s credit strength. Of the total allocations, 64% was allocated to Central Banks / Agencies, followed by 27% to Banks, and 9% to Insurance, Pension and other real-money Fund Managers.
The Trust Certificates will be dually listed on the London Stock Exchange and Bursa Malaysia under an Exempt Regime program.
Dr. Abdul Aziz Al Hinai, Vice President Finance, who led the IsDB delegation for the roadshow commented: "We are delighted with the outcome of the deal which achieved our main objectives for the transaction to continue building on the success of our prior deals and achieving even better pricing for the Sukuk. I would like to thank the IDB’s member countries for their continuous support and commend the lead managers for delivering a deal that fully met all of our objectives. We hope that this
lower cost of funding in spread terms will allow us to extend even better financing terms to our member countries to meet their developmental needs.”