The International Islamic Liquidity Management Corporation (IILM) on the 15th June 2022 added another feather to its cap with the offering of its first-ever 12-month Sukuk, believed to be the first US dollar issuance of its kind globally.
The US$250 million tranche, issued alongside a US$250 million one-month and a US$330 million three-month series, received over US$1.59 billion in bids, representing an oversubscription of 1.85 times.
“The 12-month issuance was to meet the growing demand of investors for such tenor and the IILM is pleased to have been able to fulfil this long-lasting demand and subsequently, contribute to the stability of the wider Islamic finance industry,” according to the IILM.
The one-year paper, part of a US$4 billion short-term Sukuk program, is a welcome addition to diversifying the supply of high-quality Shariah compliant liquidity instruments, particularly in commencing to build out an Islamic benchmark yield curve up to 12 months.
The Wakalah offering was subscribed mostly by investors in the GCC, with banks taking the largest portion. It was priced within market expectations at 3.65% or US Treasury bills one-year+99bps or 12-month LIBOR+9bps.
“We have to bear in mind that the IILM’s 12-month tenor was issued on the back of tightened monetary conditions and investors staying cautious. Since the beginning of 2022, we were seeing sovereign issuers as well as financials and corporates staying on the sidelines as global central banks started to address the 40-year high inflation with an unexpected aggressive stance,” the IILM explained. “We were also seeing central banks around the world, with currencies either pegged to the US dollar or with a majority exposure in its basket, started tightening their own monetary policy.”
Building on the success of its inaugural issuance, the IILM has since issued another two 12-month papers and it intends to auction another in July as well as in October this year.
Summary of Terms and Conditions | |
Issuer | IILM 2 SA |
Issuance amount | US$250 million |
Purpose of issuance | Providing liquidity management tools to institutions offering Islamic financial services |
Trustee | Citi Bank |
Tenor | 12-month |
Coupon rate/return | 3.65% |
Currency | US dollar |
Maturity date | 15th June 2023 |
Lead manager(s) | Primary dealers: |
Governing law | The IILM is governed under its own articles of agreement, by-laws, and resolutions issued by its governing board |
Underlying assets |
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Rating | ‘A-1’ by S&P ‘F1’ by Fitch |
Shariah advisor(s) | The IILM Shariah board committee |
Structure | Wakalah |
Tradability | Yes |
Investor breakdown | Investor regional breakdown:
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Type of investors: |
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Face value/minimum investment | Minimum purchase size of US$200,000 Sukuk issued at par |