International Finance Corporation (IFC), a member of the World Bank Group, will list its first sukuk of $100 million with the Nasdaq Dubai and Bahrain stock exchanges.

The IFC Hilal Sukuk will be a dollar-denominated non-amortising 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 GCC.

“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 GCC. This is also the first sukuk to be listed and cleared in the GCC 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 to 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.-TradeArabia News Service