The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Islamic finance moves on with debut Eurobond

Issuer: Islamic Development Bank
Size: $400 million
Bookrunner: Citigroup
July 29 2003


The Islamic Development Bank's five-year fixed-rate $400 million debut Eurobond has taken Islamic finance another step forward. Not only does it further underscore the demand for such bonds among both Islamic and conventional institutions, it is the first time an Islamic bond, which has to be asset backed, has been backed by a pool of assets, paving the way for greater flexibility for shariah-compliant issuers.

Underlying issue Money has no intrinsic value in Islamic finance, so bonds have to represent a real underlying asset. Bahrain's $250 million sukuk (shariah-compliant asset-backed bond) issued in May 2003 is backed by an ijara lease on the country's airport; Malaysia's $600 million global sukuk, launched in June 2002, is similarly backed by an ijara on a single piece of government property.

In contrast, the IDB's debut issue is backed by a pool of ijara leases as well as murabaha and istina contracts spread across 15 countries. The ijara are leases that the bank has financed for development projects in member countries, such as the purchase of railway carriages for the Sudan Railways Corporation. The pool also includes the lease financed by the IDB for an A330-200 for Emirates, the Dubai-based airline [see Opportunity knocks on the Islamic front, this issue].

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree