Islamic Development Bank plans sukuk offering to raise $850m

Our Correspondent
Filed on September 18, 2010

JEDDAH The Islamic Development Bank (IDB) based in Jeddah is gearing up for its latest sukuk offering under its Medium Term Note (MTN), or Trust Certificate Issuance Programme, which was officially increased this month from $1.5 billion to $3.5 billion.

Mohamed Tariq, senior adviser to the IDB President Ahmad Mohammed Ali, said the bank was poised to go to the international financial markets this month to raise funds in excess of $850 million in a sukuk issuance under its $3.5 billion MTN Programme.

In Kuala Lumpur Abdul Aziz Al-Hinai, vice-president, finance, IDB, confirmed that the bank plans to go to the market in the last quarter of 2010 to raise $1 billion through a sukuk issuance of 5, 7 and 10-year tenors and which would be listed on the London Stock Exchange and the Bursa Malaysia.

Another sign that the IDB is gearing up to an issuance is the reaffirmation on August 25 by international ratings agency Fitch Ratings of its ‘AAA’, the rating of the IDB Trust Service Limited’s $3.5 billion MTN Programme which benefits from a liquidity facility provided by the IDB.

The rating affirmation follows the IDB’s announcement that it has increased the ceiling of the programme to $3.5 billion from $1.5 billion in August.

The programme’s rating is supported by the IDB’s long-term issuer default rating (IDR) of ‘AAA’ with a stable outlook.

Another international rating agency Moody’s Investors Service has already reaffirmed for a fifth consecutive year the Islamic Development Bank’s ‘AAA’ long term and ‘P-1’ short term foreign currency issuer rating with a stable outlook.

Moody’s stated that the IDB’s rating is strongly supported by the commitment of its member countries, and highlighted that the capital base of the bank is strong, its operational assets continue to perform well, it has a high level of liquidity and very low level of debt. Moody’s concluded that the bank’s risk profile is likely to remain healthy over the medium term.

At the same time the IDB is looking at a number of private placements of local currency sukuk even in non-member countries such as a sterling issue in the UK, or a HK Dollar issue in Hong Kong. —

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