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GLOBAL: The IDB has more
than doubled its US$10 billion Sukuk program to US$25 billion as the
multilateral organization seeks to mobilize new lines of financing across
member countries, including almost US$450 million in development funding
approved recently.
Development projects aside, the higher Sukuk program ceiling will assist
the bank in expanding its Sukuk yield curve and creating a benchmark in the
supranational market while diversifying and growing its international
investor base. Traditionally issued at a maturity of between five to seven
years, the IDB is also keen to widen its secondary trading yield curve
beyond the current five-year maturity horizon.
Having first tapped the Islamic capital markets in 2003, the financier has
consistently returned to the market almost every year since 2009 while also
raising funds via reverse Murabahah and Wakalah placements.
The reintroduction of its medium-term Sukuk is most welcomed by market
players and demonstrates the strength of the Islamic bank in the international
capital markets. Highly in demand due to its solid ‘AAA’ rating and
zero-risk weighted status awarded by the Basel Committee and European
Commission, IDB papers are also sought after due to its flexibility as a
liquidity management instrument. They are eligible as liquidity buffer of
banks under the Financial Conduct Authority, permitted as repo collateral
by the Bank of England and accepted as marketable assets by the European
Central Bank.
The IDB last issued Sukuk in March – a US$1 billion five-year Wakalah
facility.
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