IFC Debuts $100 Million Islamic Bond on Dubai and Bahrain
Stock Exchanges
First Non-Islamic Financial Institution to Issue Sukuk for
Term Funding
October 21, 2009
IFC, a member of the World Bank Group, today announced that
it will list its first Sukuk (Islamic finance investment
certificates) with the Nasdaq Dubai and Bahrain stock exchanges
The IFC Hilal Sukuk will be a dollar-denominated $100
million non-amortizing issue with a five-year maturity. It will
help develop the region's nascent Sukuk market and encourage
other sovereign and corporate issuers to engage with member
countries of the Gulf Cooperation Council.
"The Sukuk is an innovative way for IFC to create
opportunities for Islamic investors who want to make a positive
social impact," said Lars Thunell, IFC Executive Vice President
and CEO. "It also supports the World Bank Group's goals to
integrate the Arab world into the global economy and offer
greater opportunities for its people.
"Islamic finance adheres to Islamic law, known as Shariah.
Its most basic features include a requirement that investor and
borrower share in the risk of a venture, and a prohibition on
charging interest. Shariah also prohibits investment in certain
activities, for example, gambling or selling alcohol.
Sukuks are investment certificates with undivided ownership
share in underlying Sharia-compliant assets. The IFC Sukuk will
support a pipeline of Islamic finance projects in key sectors
such as health, education and infrastructure. A separate special
purpose vehicle will issue the IFC Sukuk and warehouse the
underlying assets. The syndicate includes HSBC Amanah, Dubai
Islamic Bank, Kuwait Finance House Bahrain, and Liquidity
Management House.
"We are grateful to the Shariah scholars, our partners at
the Dubai and Bahrain exchanges, and the syndicate for guiding
us through this complex process, and hope that the model will
facilitate the process for other issuers to enter the Sukuk
market," said Nina Shapiro, IFC Vice President for Finance and
Treasurer.
The Sukuk global asset class has a market value of over $200
billion. IFC is the first non-Islamic financial institution to
issue a Sukuk for term funding in the Gulf Cooperation Council.
This is also the first Sukuk to be listed and cleared in the
Gulf Cooperation Council market only. The IFC Sukuk has been
rated Aaa by Moody's.
IFC issued its first Islamic bond in 2004. That bond,
denominated in the Malaysian Ringgit currency, was a $132
million equivalent three-year bullet bond. In early 2008, IFC
formed an Islamic Finance Working Group that aims to develop a
more strategic approach to Islamic finance activities. The
efforts of the working group and the expansion of IFC field
offices in the Middle East and North Africa region have
contributed to a committed portfolio of over $190 million in
loans and equity in the region.
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