IsDB Closes Second SOFR-linked Public Sukuk Issuance in 2025 with a USD1.2bn Sukuk Wakala Amid Volatile International Market Conditions
The Islamic Development Bank (IsDB), the multilateral development bank (MDB) of the 57-member OIC (Organisation of Islamic Cooperation) countries and one of the most proactive issuers of Sukuk, successfully priced its second public Sukuk issuance of 2025 – a Fixed Rate Senior Unsecured USD-denominated USD1.2bn Sukuk Wakala offering on 17 June 2025 with a tenor of five years. The structure is based on a Public SOFR (Secured Overnight Financing Rate) Benchmark Sukuk Wakala under the Regulation S Rule 144A Exempt format.
The IsDB’s first foray into the Sukuk market in 2025 was on 11 March when it closed a similar SOFR-linked Fixed Rate Senior Unsecured USD-denominated USD1.75bn Sukuk Wakala offering also with a tenor of five years under the same format.
The trust certificates were issued by IsDB Trust Services No.2 SARL (Luxembourg Incorporated) under its US$25 billion Trust Certificate Issuance Programme on behalf of the Guarantor and Obligor, the Islamic Development Bank.
The transaction was successfully issued amidst a volatile international market and period, demonstrating the IsDB’s long standing presence in the USD Sukuk market. The transaction is the Bank’s second USD benchmark issuance this year, following significant milestones achieved in 2024 that saw the issuance of three successful public benchmark transactions across the Euro and USD markets aggregating USD3.78bn and comprising USD2bn, USD1.25bn and €500mn (USD527.23mn) transactions in May, October and November 2024. The other milestone achieved in 2024 was the Bank crossing the USD50bn mark in total Sukuk issuances since it started issuing in 2003.
The IsDB had mandated BBVA, BMO Capital Markets, Citi, Emirates NBD Capital, Goldman Sachs International, NATIXIS, Societe Generale, and Standard Chartered Bank to act as Joint Lead Managers and Bookrunners to the transaction and to arrange a series of investor calls and roadshows in London, Europe, the GCC, the Middle East, Asia and Offshore US Accounts.
The 5-year Sukuk transaction was announced to the market on Monday, 16 June 2025, with Initial Pricing Thoughts (IPTs) around the US SOFR Mid Swap (SOFR MS) plus 58 basis points (bps) area. According to the IsDB, despite the competing supply from peers across tenors, and the heightened geopolitical crises, the investor demand was supportive from the outset resulting in the strong Indications of Interest (IOIs) that exceeded USD1.35bn.
The orderbook officially opened the following morning, on Tuesday, 17 June, with guidance reiterated at the SOFR MS plus 58 bps area. Investor orders, says the IsDB, continued to grow and held onto the orderbook, allowing the Bank to set the final spread at SOFR MS plus 57 bps – one point tighter than the IPT, translating into an overall profit rate of 4.246% per annum payable on a semi-annual basis and priced at par.
Due to the oversubscription by a high-quality investor base, the IsDB decided to upsize the transaction from an initially planned USD1.0bn to USD1.2bn. This compared with the pricing of the USD1.75bn Sukuk offering in March 2025 which closed with a final spread of SOFR MS plus 54 bps and a profit rate of 4.211% per annum, payable on a semi-annual basis and priced at par.
The Bank’s investor marketing activities and credit standing, stressed the IsDB, was once again rewarded with participation by new investors who invested for the first time.
Final allocations were very well diversified, with 45% from the Middle East and North Africa, 34% from the UK and Europe, 20% from Asia and 1% from Offshore US accounts.
Dr. Zamir Iqbal, the Vice President (Finance) and CFO of IsDB, commented: “Despite a particularly volatile market, we are extremely pleased with the successful close of our latest Sukuk issuance, which was upsized from USD1bn to USD1.2bn. This outstanding result is a testament to the strong confidence investors have in IsDB’s creditworthiness and our vital mission to foster sustainable development across our member countries. The proceeds will be instrumental in funding our strategic initiatives and supporting impactful projects globally.”
The IsDB remains the most proactive and prolific issuer of AAA-rated Sukuk in the international market. The Bank is rated Aaa/AAA/AAA by S&P Global Ratings, Moody’s Investors Service and Fitch Ratings (all with Stable Outlook), and has been designated as a Zero Risk Weighted Multilateral Development Bank (MDB) by the Basel Committee on Banking Supervision and the Commission of the European Communities.
With the proceeds of this issuance, the Bank will continue to support projects that deliver socio-economic growth in its 57 Member Countries and Muslim communities globally. The projects are aligned with the Bank’s three overarching objectives under the Bank’s Realigned Strategy, i.e., (a) boosting recovery, (b) tackling poverty and building resilience, and (c) driving green economic growth.
According to Mohammed Sharaf, IsDB Treasurer and Zakky Bantan, Manager of the Capital Markets Division, the Bank’s “agile approach and the active and continuous engagement with investors has proven fruitful for a strong execution in these market conditions and achieving 80% of the Bank’s funding program for the year. Our sincere thanks go to all investors for their unwavering trust and to the joint bookrunners for their meticulous efforts in bringing this endeavour to fruition.”
The IsDB last year celebrated its Golden Jubilee. It aims to deliver socio-economic growth in its 57 Member Countries and Muslim communities globally through building green and resilient infrastructure and inclusive human development. This covers projects targeting poverty, climate action, food insecurity, and building resilience.
The Bank’s operations span across four continents, touching the lives of nearly 1 in 5 of the global population. Its mission is to equip people to drive their own economic and social progress at scale, putting the infrastructure in place and enabling them to fulfil their potential.
The Trust Certificates have been admitted for listing on the Regular Market of Euronext Dublin and NASDAQ Dubai on 26 June 2025.