Islamic Development Bank to return to ringgit sukuk market

SARAJEVO May 5 The Islamic Development Bank (IDB) plans to sell local currency Islamic bonds (sukuk) in the Malaysian market this year after a three-year hiatus, the head of the Jeddah-based multilateral lender told Reuters.

The deal would be the fourth ringgit-denominated sukuk from the AAA-rated IDB, one of the largest issuers of sukuk alongside the governments of Malaysia, Indonesia and Qatar.

"It could be both, private and public placement," IDB president Ahmad Mohamed Ali said on the sidelines of an industry conference in Sarajevo, adding that specific size and timing of the deal would depend on market conditions.

"We have a very active cooperation and relationship with Malaysia and sometimes we need to have ringgit and we will act according to the needs and issue sukuk in ringgit."

The IDB board has approved the issuance of up to 400 million ringgit ($99.9 million) in sukuk this year, from a 1 billion ringgit programme listed on Bursa Malaysia in 2008.

It has raised a total of 700 million ringgit via three sukuk transactions since then, the latter a 5-year 300 million ringgit sukuk in July of 2013.

Last year, the IDB increased the ceiling of its flagship London-listed sukuk programme to $25 billion from $10 billion, aiming to expand its financing activities.

The bank, which operates to promote economic development in Muslim countries and communities, has 56 member countries and counts Saudi Arabia, Libya and Iran as its largest shareholders.

(Reuters / 04 May 2016)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Islamic Development Bank increases sukuk programme to $25 bln

The Islamic Development Bank (IDB) has increased the ceiling of its Islamic bonds (sukuk) programme to $25 billion from $10 billion, as it aims to expand its financing across member countries, the Jeddah-based lender said on Tuesday.

An expanded programme would support the AAA-rated bank's aim to issue one sukuk publicly every year with a minimum size of $1 billion, while keeping pace with growing investor requests for private placements.

IDB sukuk are highly sought after by banks since the lender is designated a zero risk-weighted institution by the Basel Committee, the international banking supervisory body. This means its paper can be used to manage capital adequacy on bank balance sheets.

The programme has now been expanded three times since it was set up in 2005 - the IDB raised $4.4 billion in 2014 and last tapped the market in March with a $1 billion deal.

Most IDB sukuk have been issued with maturities of 5 to 7 years, but the lender wants to build a wider yield curve. This would help price longer-dated infrastructure transactions which the IDB wants to promote.

The bank, which operates to promote economic development in Muslim communities, has 56 member countries including Saudi Arabia, Libya and Iran as its largest shareholders.

The IDB also approved development projects worth a combined $450 million, including a $200 million energy project in Mozambique and $70 million to finance the import of agricultural equipment in Kazakhstan, it said in a statement.

In 2013, the IDB more than tripled its authorised capital to $150 billion. It provides financing, loans and technical assistance for development schemes which follow Islamic principles, such as bans on interest payments and pure monetary speculation.

(Reuters / 10 June 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com