IILM to sell US$1.34bn of bills in biggest Islamic offering


International Islamic Liquidity Management Corp., which counts nine central banks as its shareholders, plans to sell $1.34 billion of three-month bills in its biggest offer since being set up in 2010 to support Shariah-compliant financial activity.
The Kuala Lumpur-based institution, which added two more primary dealers to its existing network of nine last week, will auction the Islamic notes on Feb. 18, it said in a statement. The company known as IILM has a short-term issuer rating of A-1 from Standard & Poor’s, the second-highest investment grade, and has sold a total $14 billion of debt denominated in the U.S. currency.
While IILM has increased issuance of short-term paper each year since its debut offering in 2013, the supply is far short of the $400 billion that Ernst & Young LLP estimates is needed to help Islamic banks manage their liquidity. Global sukuk sales slumped 29 percent in 2015, the most since the credit crunch of 2008.
“There’s a lot of demand for short-term paper from banks seeking to manage their cashflow,” said Adissadikin Ali, the Kuala Lumpur-based chief executive officer at the Malaysian unit of Bahrain’s Bank Alkhair. “IILM’s planned sale is a positive move as it will promote greater activity in the Islamic finance industry.”
Worldwide Islamic bond sales fell to $35.4 billion in 2015, the lowest in five years, data compiled by Bloomberg show. Issuance edged up 1.8 percent in 2014 and declined 5.6 percent the previous year, off the peak of almost $52 billion in 2012.
IILM was formed by central banks including those from the Middle East, Southeast Asia, Africa and Luxembourg, as well as the Islamic Development Bank based in Saudi Arabia. The indicative ask yield on its existing Islamic bills maturing in April 2016 was 1.065 percent as of 4:15 p.m. in Kuala Lumpur on Thursday, according to data compiled by Bloomberg, while the ask yields from participating dealers ranged from 0.85 percent to 1 percent. The notes were sold to yield 1.0736 percent.

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