Kuala Lumpur/Hong Kong, December 3, 2004
— The International Finance Corporation, the private sector arm of the World Bank Group, today launched an Islamic Malaysian ringgit (MYR) denominated bond issue in the domestic market. The MYR 500 million (approximately US$132 million equivalent) three-year bonds were issued as Bai Bithaman Ajil Islamic Securities. IFC is the first supranational to issue Islamic securities in the Malaysian market, and first supranational to issue domestic Islamic bonds in any market. This transaction provides a benchmark for future high-grade issuers and helps deepen the overall the capital market and develop Islamic finance in Malaysia.
The three-year Islamic bonds carry a 2.88% coupon rate. The issue was heavily oversubscribed with an order book size of 4.3 times at final pricing. This reflected strong demand for the securities in Malaysia and also from abroad. The joint lead managers are HSBC Bank Malaysia Berhad and Commerce International Merchant Bankers Berhad. The proceeds of the issue were swapped into floating rate U.S. dollar funds.
"IFC is very pleased to launch in the Malaysian capital markets the first ever domestic Islamic bond issue by a supranational, and to support the government's objective of accelerating development of their capital market” said IFC Vice President, Finance and Treasurer Nina Shapiro. “The transaction is the result of months of close cooperation between the Corporation and government on the regulations and procedures governing “Wawasan” issuance. By establishing IFC’s credit in the domestic market, we hope to follow through with other structured financial products for clients in local currency.”
“IFC executed this groundbreaking Islamic finance transaction according to international best practice, including marketing, documentation, book building and price discovery.” said IFC Deputy Treasurer and Head of Funding John Borthwick.
In his remarks launching the transaction, Tan Sri Nor Mohamed Yakcop, Minister of Finance II said, “I am happy to note that the IFC has decided to issue its inaugural bond in Malaysia in the form of an Islamic issue. This pioneering transaction by a supranational institution is indeed a significant accomplishment as this is in line with the Malaysian government’s goal to broaden and develop our Islamic domestic capital market as well as our aspiration to make Malaysia an important international Islamic financial center.”
IFC funds its lending activities by issuing bonds in the international capital markets. The Corporation’s securities, which are rated Aaa by Moody’s and AAA by S&P, have been issued in 31 different currencies. IFC’s funding program for fiscal year 2005 is around $3.0 billion. IFC has been the first, or among the first, nonresidents to issue in many currencies including Colombian pesos, Spanish pesetas, Portuguese escudos, Greek drachmae, Hong Kong dollars and Singapore dollars in the domestic markets, and in Czech koruna, Philippine pesos and Polish zloty in the eurobond markets.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people?s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndication
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