IFC’s Sukuk to help Arab markets: Lars Thunell

Microfinance Focus, Nov. 18, 2009: IFC has asserted that strategic investments in Gulf Cooperation Council countries can strengthen financial markets and promote economic development in the Middle East and North Africa.

“Our investments in the Gulf Cooperation Council capital markets create opportunities across the region while providing productive outlets for excess savings generated by oil-producing countries,” said Lars Thunell, IFC Executive Vice President and CEO, at a news conference in Dubai.

Abdulla Mohammed Al Awar, CEO of the Dubai International Finance Centre Authority said: “IFC’s investments, expertise and knowledge of best practices will help develop both the Sukuk market and capital markets in the region. We look forward to continue promoting an enabling business environment to help IFC advance its objectives.”

On November 3, IFC became the first non-Islamic financial institution to issue a Sukuk for term funding in the Gulf Cooperation Council. IFC plans to issue Sukuks every 12 to 18 months.

The IFC Sukuk was over-subscribed and pricing was at 15 basis points over Mid Swaps, the tightest pricing for a Sukuk so far. There were 15 orders and 90 percent of the demand came from institutional investors in the Middle East.

IFC selectively invests in the Gulf Cooperation Council to support the development of financial markets, regional integration and private sector development in the Middle East and North Africa. IFC also promotes south-south investment from Gulf Cooperation Council countries to developing markets.

“Over the last three years, IFC has invested $1.5 billion alongside Gulf investors in their intraregional investments,” said Thunell.

The IFC Sukuk is a five-year, dollar–denominated, non-amortizing issue with total face value of $100 million. It is backed by a portfolio of IFC projects, structured as Islamic-compliant financial leases, with comparable disbursed value.

“The Arab world is a priority for the World Bank Group, and addressing unemployment in the region is critical for long-term growth and development,” said Michael Essex, IFC Director, Middle East and North Africa. “IFC has invested $4 billion in the region over the last three years to support the private sector and create jobs,” he said.

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