IFC debuts Islamic bond on exchange

IFC Islamic Bonds

The International Finance Corp., an arm of the World Bank, has today announced it will be listing its first Sukuk, worth US$100 million, on the Dubai and Bahrain stock exchanges.

The IFC Hilal Sukuk will be a dollar-denominated, non-amortizing issue with a five-year maturity. It is hoped the bond 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.

IFC chief Lars Thunell, said of the deal: "The Sukuk is an innovative way for IFC to create opportunities for Islamic investors who want to make a positive social impact.

"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."

Strict laws

Sharia law's 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.

The IFC Sukuk is aimed at supporting a pipeline of Islamic finance projects in key sectors such as health, education and infrastructure, while a separate body will issue the IFC Sukuk and "warehouse" underlying assets.

The syndicate also includes HSBC Amanah, Dubai Islamic Bank, Kuwait Finance House Bahrain, and Liquidity Management House.

Islamic finance rapidly growing

The IFC issued its first Islamic bond in 2004 and formed an Islamic finance working group last year to develop a more strategic approach to Islamic finance activities.

The global Islamic sector is growing rapidly and is now thought to be worth US$1 trillion, but still only represents one percent of world capital which means the scope for the industry's growth is substantial.

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