IFC Debuts $100 Million Islamic Bond on Dubai and Bahrain Stock Exchanges: First Non-Islamic Financial Institution to Issue Sukuk for Term Funding.
In Dubai:
Salah-Eddine Kandri
Phone: (971) 4-360-1009
E-mail: SKandri@ifc.org
In Washington, D.C.:
Alexandra Klopfer
Phone: (202) 473-4645
E-mail: aklopfer@ifc.org
Dubai, 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 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.
About IFC
IFC, a member of the World Bank Group,
creates opportunity for people to escape poverty and improve their lives.
We foster sustainable economic growth in developing countries by supporting
private sector development, mobilizing private capital, and providing advisory
and risk mitigation services to businesses and governments. Our new investments
totaled $14.5 billion in fiscal 2009, helping channel capital into developing
countries during the financial crisis. For more information, visit www.ifc.org.
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