GulfBase Live Support
27/11/2014 06:43 AST
The private sector arm of the Jeddah-based Islamic Development Bank plans to tap Islamic capital markets to raise as much as $1.2 billion in long-term funds during its current financial year, its chief executive told Reuters.
The Islamic Corporation for the Development of the Private Sector (ICD) will also explore a capital increase as it expands its economic development activities, with a proposal to be presented to shareholders in June 2015.
Established in 1999, the ICD has been implementing a new strategy to help widen the appeal of Islamic finance by establishing banks, leasing companies and insurers that following Islamic principles.
On Monday, Fitch Ratings assigned an AA credit rating to the ICD, which has a low level of leverage but which is expected to grow as the institution increases its lending activities.
This would require a more active presence by the ICD in the capital markets during its current financial year, which started in October.
"This rating will pave the way for ICD to tap the Islamic capital markets," said Chief Executive Khaled Al-Aboodi.
"Under our borrowing program recently approved by the board, we plan to raise long-term funds from the markets of up to $1.2 billion equivalent."
The ICD first accessed the Islamic debt capital markets in September, when it obtained a $100-million three-year murabaha financing facility from the Bank of Tokyo-Mitsubishi UFJ. Murabaha is a common cost-plus sale arrangement in Islamic finance.
The ICD will consider both syndicated Islamic loans as well as issuance of sukuk (Islamic bonds), Al-Aboodi added.
"Given that our funding strategy aims to diversify our funding sources, we will be pursuing both solutions (syndicated Islamic loans as well as issuance of sukuk), subject naturally to cost efficiency considerations."
The ICD is among the best capitalized multilateral development banks, but lacks a legally binding support mechanism to address capital shortages, Fitch said in its rating note.
In the medium term, capitalization could weaken due to strong lending growth, which is likely to require a capital increase contemplated to be $1 billion for the 2016-2019 period, Fitch said.
As of October, the major shareholders of the ICD were the IDB and Saudi Arabia with a 46.7 percent and 18.7 percent share of paid-in capital respectively.
Saudi Gazette
Ticker | Price | Volume |
---|---|---|
SABIC | 114.77 | 5,915,941 |
05/04/2018
Saudi Arabia's Public Investment Fund (PIF) has signed an agreement with Six Flags to develop and design an amusement park in Riyadh. Six Flags, the world’s leading international amusement park compa
Arab News
05/04/2018
In an exclusive interview with Arab News, Turki Mohammed Al-Shehri explains how an expanding renewables industry will boost employment as well as pave the way for a greener future.
A massiv
Arab News
05/04/2018
Dubai’s residential property market continued to soften in the first three months of this year, in line with analysts’ forecasts, with rental values recording a more pronounced fall than sales prices
The National
05/04/2018
Buoyed by a strong oil price of $70 per barrel, Saudi Arabia’s Tadawul shot up by over 6 per cent in March 2018, according to Kuwait Financial Centre’s (Markaz’s) recently released Monthly Markets Re
Times of Oman
05/04/2018
Qatar banks’ combined credit facilities to real estate sector rose by QR17bn to QR147.7bn in 2017. The banks’ credit to various sectors stood at QR911bn at the end of 2017, up from QR839bn recorded i
The Peninsula