The Islamic Development Bank (IsDB) raised $2.5 billion with its Sustainability Sukuk, which is also its biggest public issuance to date.
The bank successfully priced the 5-year Trust Certificates under its $25 billion Trust Certificate Issuance Programme, said a press release.
It was priced at par with a profit rate of 1.262%, payable on a semi-annual basis.
The Joint lead managers and joint bookrunners for this issuance are Citi, HSBC, Goldman Sachs International, NATIXIS, Société Générale, Standard Chartered Bank and Warba Bank. Kuwait International Bank was the co-manager.
Proceeds of the Sustainability Sukuk will be allocated to finance/refinance green (10%) and social development projects (90%) that are eligible under the IsDB' s Sustainable Finance Framework, which was created in line with the Green Bond Standards, Social Bond Standards and Sustainability Bond Guidelines published by the International Capital Market Association (ICMA).
Due to the high demand, the bank was able to tighten the pricing by more than 15% between announcement and closing.
The transaction was announced on 22 March and the Initial Price Thoughts were set at Mid Swap (MS) plus 39 (bps) area and released on the next day. With strong demand from investors, the deal was eventually priced at MS plus 33 bps, tightening by 6 bps, with an overall profit rate of 1.262% as against the previous largest issuance in dollars in February 2020, which had a profit rate of 1.809%. This is one of the lowest profit rates that the Bank has achieved for a public Sukuk.
Following the successful pricing, the president of IsDB, Dr Bandar Hajjar stated, "As the world continues to find better ways to respond to the ongoing pandemic, IsDB is proudly leading with its role of mobilising critically needed resources at low cost for its Member Countries in order to finance green and resilient recovery."
Dr Zamir Iqbal, the vice president (Finance) and CFO of IsDB, commented, "We are delighted to have achieved yet another landmark Sukuk transaction as we continue to support the Bank's COVID-19 response efforts. The range of investors has once again reposed their faith in our AAA-rated paper which provides best-in-class risk-adjusted returns. The lower cost of funding will enable IsDB to extend better financing terms to our Member Countries for supporting their critical needs during, and post, pandemic. We are also very pleased to see new investors participating in the Sukuk and we welcome them as our partners in development."