According to a bank document, $1 billion worth of Islamic bonds were sold by Islamic Development Bank (IsDB) on Thursday. The multilateral lender based in Jeddah, Saudi Arabia sold the Sukuk at 62 basis points over five-year U.S. Secure Overnight Finance Rate (SOFR) mid-swaps, which was tightened from the initial guidance in the mid-60s bps, the document revealed.
The deal was worth more than $1.7 billion, which included a further value of $620 million in interest from lead managers. The joint lead managers were Dukhan Bank, BNP Paribas, Goldman Sachs, The Islamic Corporation for the Development of the Private Sector, Standard Chartered, Mizuho, SNB Capital, JPMorgan, and Credit Agricole.
The opportunity quickly attracted the issuers in the Gulf because of the plummeting sales of bonds this year together with high-interest rates. The market also was becoming very unpredictable leading to unstable bond issue sales.
$1 Billion Worth Of Islamic Bonds Were Sold By Islamic Development Bank (IsDB)
Islamic Development Bank was established in 1973 in Jeddah, Saudi Arabia as a multilateral development financial institution aimed at managing Islamic finance for the development of infrastructure.
It consists of 57 shareholding states and the largest shareholder is Saudi Arabia. IDB has received a AAA credit rating from institutions like Standard and Poor’s, Moody’s, and Fitch. It is also an observer at the United Nations General Assembly.
The Islamic Development Bank had also spearheaded public projects like the construction of a bridge that connected the isolated Gao region in Mali to its heartland. IsDB believes in the philosophy that every person has the right to live with dignity and to aspire for prosperity in life.
They believe in equipping people to initiate their own path to economic and social progress by providing the infrastructure that enables them to fulfill their potential. IsDB does this by creating collaborative partnerships with communities and nations and creating a working model with reference to the UN Sustainable Development Goals.
The Bank is also required to handle special funds for specific purposes like offering financial aid and assistance to Muslim communities in non-member countries together with setting up trust funds.
IsDB is also authorized to accept deposits and to assemble financially viable resources that work through Shari’ah-compatible models. The ambition of the Islamic Development Bank is to foster an innovative, sustainable and ethical model of resource management so that it can tackle any sort of development challenges.
The IDB functions mainly by participating in equity capital and issuing loans for developmental projects and enterprises. They also provide financial assistance to its member nations aimed at creating economic and social development.
IsDB also offers educational scholarships for Undergraduate programs, Master’s programs, Ph.D. and Post Doctoral Programmes, etc for the students of its member nations.
Apart from the Islamic Development Bank, the IsDB has four other organizations working with it namely, the Islamic Corporation for Development of the Private Sector (ICD), the International Islamic Trade Finance Corporation (ITFC), the Islamic Research and Training Institute (IRTI), and Islamic Corporation for Insurance of Investment and Export Credit (ICIEC).
IDB carries out a wide range of integrated and specialized activities like public and private sector project financing, technical assistance in capacity building, Trade financing, resource mobilization, emergency relief, Awqaf investment, and financing to name a few.
The largest developer in Sharjah, Arada Developments also made its presence felt in the market with Sukuk on Thursday.
They raised an impressive $100 million as part of the reopening of existing notes. Saudi Arabia was able to raise $5 billion with Sukuk and bonds on Tuesday. The IsDB has its headquarters in Jeddah, Saudi Arabia with 7 decentralized regional Hubs in Nigeria, Morocco, Turkey, Kazakhstan, Senegal, Bangladesh, and Indonesia, and a Center of Excellence in Malaysia.