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IILM dual-tranche sukuk lures Gulf, Asian investors
Reissuance split in response to current market conditions, including recent Fed rate hike
The Asset 12 May 2022

The International Islamic Liquidity Management Corporation (IILM) on May 11 successfully reissued a US$910 million short-term A1-rated sukuk across one- and three-month tenors.

The two series were priced competitively at 1.03% for US$330 million for the one-month tenor and 1.6% for US$580 million for the three-month.

The reissuance, which marks the IILM’s fifth sukuk auction for 2022, garnered significant interest among Islamic primary dealers and investors across the Gulf Cooperation Council and Asian markets. The competitive tender witnessed a strong order book in excess of US$1.38 billion, representing an average bid-to-cover ratio of 152%.

“As evidenced by the successful auction, the IILM decided to issue two tenors of one-month and three-month, compared with the usual three, which includes the six-month issuance,” says Umar Oseni, IILM’s chief executive officer. “We made a strategic decision to split the May auction into two, given the current market conditions, especially with the recent rate hike by the US Federal Reserve of its benchmark interest rate by half a percentage point. The IILM will be offering its second May auction in about two weeks’ time.”

Further to the sukuk reissuance, the IILM has achieved year-to-date cumulative issuances totalling US$5.6 billion through 14 sukuk series. It will continue to reissue its short-term liquidity instruments monthly as scheduled in its issuance calendar.

The IILM is a regular issuer of short-term sukuk across varying tenors and amounts to cater to the liquidity needs of institutions offering Islamic financial services. The total amount of IILM sukuk outstanding is US$3.51 billion, and its short-term sukuk programme is rated A-1 by S&P Global Ratings.

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