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- Dubai 05:31 06:50 12:15 15:12 17:34 18:53
The Saudi-based Islamic Development Bank (IDB) plans to issue Islamic bonds, or sukuk, worth a total of $5 billion (Dh18.3bn) this year and the four following years, its president said.
"We hope that we can mobilise $1bn every year beginning in 2010 and for a period of five years," said IDB President Ahmed Mohamed Ali.
The planned sukuk would beef up the capability of the triple-A lender to allow it to increase lending to soften the impact of the global financial and economic crisis on some of its 56 member countries, many of them poor states in Africa, he added.
"We plan to raise $1bn every year and for five years from 2010. The issue would be sukuk and the maturity is normally for five years," said Mohamed Ali. "The sukuk will be issued on the capital market and open for all investors in Asia and Europe and elsewhere," he said.
The IDB has granted more than $56bn in loans to poor member states over the past three decades, including $4.8bn in 2008, according to the latest figures.
"The board directors of the bank had demanded that it increase its financing to its member countries affected by the crisis. To have these resources, we will go to the market and raise more financial resources," he said.
The IDB plans to expand lending to its member states by 30 per cent in the three years to 2011. "Our growth will be by 30 per cent in 2009 and the following years of 2010 and 2011 as ordered by our board of directors to assist some of our members who had been affected by the crisis," said Mohamed Ali.
He was speaking on the sidelines of a conference about the bank's leading role in financing projects by private sector investors in Morocco. The IDB was not affected by the impact of the financial crisis on global markets because it had doubled its capital in 2005 long before the crisis hit.
"We could manage in the context of this crisis even if some of our member states were affected... What happened became a blessing for us. The IDB is resilient and was able to increase its operations to help member states," he said.
In the past, foreign investors had been reluctant about Islamic financing because of its nontraditional business features but the mood shifted for the better, he said.
"In the past, the price of borrowing by us was higher but not recently and not now. Investors understand and appreciate the bank's health especially after it won AAA grade from the three main rating agencies in the world," he said.
"From now on, we can go to the market and the prices would be normal and our member states would benefit from these prices when we grant them loans," he said.
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