Brunei eyed for global sukuk roadshow
Tuesday, September 1, 2009
THE Islamic Development Bank (IDB), the multilateral development bank of 57 Muslim countries, is including Brunei, among a select list of countries in a global roadshow for the first segment of a US$1.5 billion ($2.16 billion) Islamic bond issuance, which will be worth at least US$500 million, its treasurer said in a Reuters report.
The roadshow will start tomorrow in Riyadh, followed by Kuala Lumpur, Singapore, Brunei, the United Arab Emirates, Switzerland, and finally London on September 8, Reuters quoted IDB's Mohammad Tariq as saying.
The offering is to be for a minimum of US$500 million but the actual size will depend on conditions relating to market demand and pricing at the time of issuance, he said.
HSBC, Deutsche Bank and BNP Paribas are lead arrangers with Malaysia's CIMB and Bank Islam Brunei Darussalam (BIBD) as co-arrangers for the sukuk, which will have a three to five year maturity date to be decided, while pricing will depend on investor base.
Calls made to BIBD were unreturned yesterday.
"Initial indications have been positive and we are hopeful that IDB's rating, support of its shareholders and balance sheet strength, will be seen as very positive indicators for the issue," Tariq said.
The IDB will issue the Islamic bonds to raise funds to help member countries affected by the global financial crisis, IDB President Ahmed Mohammed Ali said. "IDB has set up a committee to study the various aspects and effects of the global financial crisis and identify resources to finance investment projects in Muslim countries," the Saudi Press Agency quoted the IDB chief as saying.
The Jeddah-based triple-A lender plans to issue the latest sukuk as part of a US$6 billion sukuk and medium-term note programme partly aimed at softening the impact of the downturn and rising prices in member countries. At least 25 of the 57 IDB member countries are classified as least-developed countries, which include some of the world's poorest nations.
Asked about the bank's programme to support poor Muslim countries hit by rising prices, Mohammed Ali said the last meeting of IDB governors in Jeddah had allocated US$1.5 billion for the purpose.
"Our bank will also support member countries to increase their agricultural production," he said. "We are ready to support any project aimed at the development of member countries," he added.
Sukuk has been billed as a safer alternative to conventional bonds because returns are based on underlying assets.
While sukuk remains attractive even compared with conventional bond issuances, analysts have recently observed the rise in instances of defaults. One prime example is Investment Dar's US$100 million sukuk default.
Islamic bonds are structured as profit-sharing or rental agreements and their returns are derived from underlying assets. Hadi DP Mahmud
The Brunei Times
The roadshow will start tomorrow in Riyadh, followed by Kuala Lumpur, Singapore, Brunei, the United Arab Emirates, Switzerland, and finally London on September 8, Reuters quoted IDB's Mohammad Tariq as saying.
The offering is to be for a minimum of US$500 million but the actual size will depend on conditions relating to market demand and pricing at the time of issuance, he said.
HSBC, Deutsche Bank and BNP Paribas are lead arrangers with Malaysia's CIMB and Bank Islam Brunei Darussalam (BIBD) as co-arrangers for the sukuk, which will have a three to five year maturity date to be decided, while pricing will depend on investor base.
Calls made to BIBD were unreturned yesterday.
"Initial indications have been positive and we are hopeful that IDB's rating, support of its shareholders and balance sheet strength, will be seen as very positive indicators for the issue," Tariq said.
The IDB will issue the Islamic bonds to raise funds to help member countries affected by the global financial crisis, IDB President Ahmed Mohammed Ali said. "IDB has set up a committee to study the various aspects and effects of the global financial crisis and identify resources to finance investment projects in Muslim countries," the Saudi Press Agency quoted the IDB chief as saying.
The Jeddah-based triple-A lender plans to issue the latest sukuk as part of a US$6 billion sukuk and medium-term note programme partly aimed at softening the impact of the downturn and rising prices in member countries. At least 25 of the 57 IDB member countries are classified as least-developed countries, which include some of the world's poorest nations.
Asked about the bank's programme to support poor Muslim countries hit by rising prices, Mohammed Ali said the last meeting of IDB governors in Jeddah had allocated US$1.5 billion for the purpose.
"Our bank will also support member countries to increase their agricultural production," he said. "We are ready to support any project aimed at the development of member countries," he added.
Sukuk has been billed as a safer alternative to conventional bonds because returns are based on underlying assets.
While sukuk remains attractive even compared with conventional bond issuances, analysts have recently observed the rise in instances of defaults. One prime example is Investment Dar's US$100 million sukuk default.
Islamic bonds are structured as profit-sharing or rental agreements and their returns are derived from underlying assets. Hadi DP Mahmud
The Brunei Times
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