May 2011 was marked by a comeback of sukuk that are international, USD denominated, listed and GCC originated - a trend expected to persist through June, writes Adnan Halawi, Zawya's fixed income analyst
As much as USD4.9 billion worth of sukuk were issued in May 2011, taking the total issued globally in the first five months of 2011 to an estimated USD37.8 billion, a 62% surge compared to USD14.2 billion during the same period last year, according to data compiled by Zawya Sukuk Monitor.
USD1.2 billion - or 25% of the total - of the sukuk issued in May were out of the GCC, marking a solid comeback for Gulf sukuk.
Saudi based Islamic Development Bank sold a benchmark five-year USD750 million sukuk in the international markets as part of its USD3.5 billion MTN sukuk programme. The issue, which is third under the program and dually-listed on the London Stock Exchange and Bursa Malaysia, saw strong participation from the Asia and the MENA regions with good interest from European and US offshore investors. It achieved a larger deal size as well as tighter pricing of 2.35% according to a statement by the issuer.
Based on the success of the issuance, IDB unveiled plans to increase the size of the MTN program to up to USD8 billion and possibly issue the remainder under the current USD3.5 billion before the end of 2011. IDB's sukuk is the largest corporate sukuk out of the region so far this year.
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