IILM Reissues US$990 Million Sukuk

The Malaysia-based International Islamic Liquidity Management Corporation (IILM) has once again made a significant impact on the global Islamic finance sector with the successful issuance of $990 million in short-term sukuk across three different tenors. As a leading international organization dedicated to developing Shariah-compliant financial instruments, IILM’s move continues to reinforce its pivotal role in addressing the liquidity needs of institutions offering Islamic financial services worldwide.

This highly anticipated re-issuance aligns with IILM’s mission to provide a continuous flow of liquidity for Islamic banks and financial institutions. The Sukuk was issued across one-, three—, and six-month tenors, marking a notable milestone in the evolving Islamic finance landscape.

IILM: Breaking Down the $990 Million Reissuance

The IILM issued three series of Sukuk, all competitively priced to meet the needs of various market participants. The breakdown of the issuance includes:

• $330 million for the one-month tenor, priced at 5.35%
• $350 million for the three-month tenor, priced at 5.15%
• $310 million for the six-month tenor, priced at 5.00%

The competitive pricing attracted significant interest from investors, leading to a strong response from global markets. This issuance marks IILM’s 10th auction of the year, showcasing its consistent commitment to providing regular short-term liquidity instruments to support the expanding Islamic finance sector.

Strong Demand from Global Markets

The issuance of sukuk by IILM was met with overwhelming interest from a diverse group of investors across the Gulf Cooperation Council (GCC), Europe, and Asia. The combined order book exceeded $2.05 billion, highlighting a bid-to-cover ratio of 207%, which reflects the robust demand for these Sharia-compliant instruments. This oversubscription is a testament to the growing appeal of Islamic finance globally, as institutions across various regions are actively seeking secure, Sharia-compliant liquidity solutions.

This strong demand underscores the expanding footprint of Islamic finance, not only within Muslim-majority countries but also in regions where Sharia-compliant financial solutions are gaining traction. The success of this sukuk issuance highlights the attractiveness of Islamic financial products and the role of IILM in catering to this demand.

Year-to-Date Issuance and IILM’s Sukuk Program

As of 2023, IILM has issued a cumulative total of $9.37 billion across 30 Sukuk series. These figures not only reflect the organization’s prominent role in the Islamic finance ecosystem but also demonstrate the increasing reliance of Islamic financial institutions on IILM’s liquidity management tools.

The IILM’s short-term sukuk program is rated A-1 by Standard & Poor’s (S&P) and F1 by Fitch Ratings, underscoring the high creditworthiness of the organization’s instruments. The Sukuk is part of IILM’s $6 billion short-term sukuk issuance program, which is designed to meet the liquidity needs of the global Islamic finance community. With this latest issuance, the total amount of outstanding IILM sukuk is now $4 billion.

These ratings are crucial for building investor confidence, as they offer assurance regarding the safety and reliability of IILM’s financial instruments. By maintaining strong credit ratings, IILM enhances its ability to attract a diverse range of global investors, which is essential for promoting the growth of Islamic finance.

The Critical Role of IILM’s Sukuk

The IILM’s regular issuance of short-term sukuk with one-, three–, six-, and 12-month tenors ensures a steady supply of liquidity for Islamic financial institutions. These sukuk play an essential role in managing short-term liquidity requirements while adhering to Shariah principles, which prohibit interest-bearing instruments that are commonly used in conventional finance.

One of the key advantages of ILM’s sukuk is its flexibility. Financial institutions offering Islamic financial services can rely on these instruments to efficiently manage their liquidity without compromising their adherence to Shariah law. By providing sukuk every month, IILM helps stabilize liquidity levels and offers Islamic financial institutions a secure and compliant financial product that can be traded in global markets.

Moreover, IILM’s sukuk contributes to the overall stability of Islamic banks, ensuring that they can meet short-term obligations and manage their cash flow effectively. This stability is especially critical in volatile economic environments, where liquidity constraints can challenge the operations of financial institutions.

Distribution Through a Global Network of Dealers

A significant factor contributing to the success of IILM’s sukuk issuances is its well-established global distribution network. IILM’s sukuk is distributed through a highly diversified network of 11 primary dealers that operate globally. These dealers play a crucial role in ensuring the accessibility and distribution of IILM sukuk across various markets. The current network of primary dealers includes prominent financial institutions such as:

• Abu Dhabi Islamic Bank
• Al Baraka Turk
• Affin Islamic Bank
• Boubyan Bank
• CIMB Islamic Bank
• Dukhan Bank
• First Abu Dhabi Bank
• Kuwait Finance House
• Maybank Islamic
• Qatar Islamic Bank
• Standard Chartered Bank

This diverse dealer network ensures that IILM’s sukuk reaches a broad range of global investors, including those in the GCC, Europe, and Asia. The involvement of these institutions in distributing IILM’s sukuk demonstrates the organization’s critical role in the Islamic finance industry. The extensive reach of ILM’s sukuk not only benefits Islamic financial institutions but also attracts non-Muslim investors who are interested in ethical financial products that adhere to Shariah principles.

The Growing Relevance IILM’s Role

As the global Islamic finance industry continues to expand, the role of the IILM becomes increasingly important. With more financial institutions worldwide seeking Shariah-compliant liquidity solutions, the demand for short-term Sukuk is expected to rise further. The IILM’s efforts to meet this growing demand are crucial for maintaining liquidity in the Islamic financial system and ensuring the continued growth and stability of Shariah-compliant banking.

The global Islamic finance industry is projected to reach $3.69 trillion by 2024, with Sukuk playing a major role in this expansion. Institutions like the IILM, which provide regular issuances of sukuk, are key to supporting this growth by offering reliable, secure, and compliant financial instruments. The IILM’s contributions to the market have helped Islamic banks and financial institutions effectively manage their liquidity while adhering to Islamic principles, positioning the organization as a pillar of the global Islamic finance ecosystem.

In addition, the increasing globalization of Islamic finance creates opportunities for the IILM to expand its influence. With new markets embracing Shariah-compliant financial products, the IILM’s sukuk issuances can serve as a benchmark for other institutions looking to establish their liquidity management tools.

I ILM’s Steadfast Commitment to Global Islamic Finance

The International Islamic Liquidity Management Corporation (IILM) continues to be a leader in addressing the liquidity needs of Islamic financial institutions. With its recent $990 million Sukuk issuance, the IILM has once again demonstrated its capacity to provide essential liquidity tools that comply with Shariah principles.

The overwhelming demand for IILM’s sukuk, as evidenced by the oversubscribed order book, highlights the growing importance of Islamic finance in global markets. As the IILM continues to issue sukuk regularly, it will remain a critical player in ensuring the continued growth and stability of Islamic financial institutions worldwide.

By offering Shariah-compliant liquidity solutions, the IILM not only supports the immediate needs of Islamic financial institutions but also contributes to the long-term growth and sustainability of the global Islamic finance industry. As the industry continues to grow, institutions like the IILM will play a pivotal role in shaping the future of Islamic finance, ensuring that it remains a dynamic and viable alternative to conventional financial systems.