Monday, October 26, 2009

WORLD BANK'S IFC SETS GUIDANCE ON $100 MLN ISLAMIC BOND

By Rachna Uppal / Reuters
First Published: October 21, 2009 - Daily News Egypt

The World Bank’s International Finance Corporation (IFC) has set price guidance for a $100 million Islamic bond, the proceeds of which will be used to fund projects in Yemen and Egypt, an executive said on Tuesday.

Michael Essex, director of the IFC’s Middle East and North Africa department, told Reuters the organization had set price guidance at 35-40 basis points over 5-year US treasuries.

Businesses including banks especially from Abu Dhabi have been testing the bonds market in recent months to raise funds after being hit by the global credit crunch.

Gulf issuance of conventional as well as Islamic bonds in 2009 has remained well below 2008 levels, but a growing appetite for emerging market debt has encouraged more bond issuance this quarter.

Last week, the $1 billion five-year sukuk issued by government-owned TDIC was the largest in the Gulf Arab region in 2009 and generated orders worth $6.7 billion.

The IFC plans to list the offering on Nasdaq Dubai and the Bahrain Stock Exchange, according to a prospectus seen by Reuters.

Essex said the funds would be used to finance six projects in Yemen and Egypt, including in the healthcare sector.

The IFC is using its first sukuk sale as a benchmark for future issuances, he said.

The private sector development arm of the World Bank, has been growing its presence in the region since 2005 as it looks to bolster financing for projects in some of the world’s poorest countries such as Yemen.

Over the last five years, the IFC increased its projects in the Middle East, North Africa and Pakistan region from 21 to 46 with its commitments rising to $1.26 billion this year from $315 million in 2005, having peaked at $1.97 billion in 2008, according to its annual report.

Dubai Islamic Bank, HSBC, Kuwait Finance House (Bahrain) and Liquidity House are joint bookrunners on the sukuk.