The IILM doesn’t issue Sukūk to raise cash to fund its operations contrary to any issuer, but to fulfil its mandate to provide the market with shari’ah-compliant finance instruments to facilitate effective cross-border Islamic liquidity management.
The IILM issuance programme is the only Islamic Asset-Backed Commercial Paper programme (ABCP) which issues short-term money market instruments up to 364 days.

The IILM Sukūk consist in liquidity management instruments with the following characteristics:

• 10-year track record with 213 issuances, from 2-week to 12-month tenor
• High credit quality backed by a pool of Sovereign, Supranational and Sovereign-linked Sukūk
• Appropriate HQLA regulatory treatment in various jurisdiction
• Tradable on the back of a high tangibility ratio of the asset pool
• Robust Primary market infrastructure based in GCC, Asia and Europe
• Secondary market supported by market makers
• Widely acceptable under Shari’ah principles

In 2022, the total of USD 13.88 billion issued accounted for 39% of the total USD Sukūk issued in the global market during the same period.

The IILM short term certificates are rated based on the structured finance rating methodology by S&P and and Fitch Ratings, which carries a short-term foreign currency rating of “A-1” and “F1” respectively. Therefore, each series drawn from the programme carries the “A-1” and “F1” ratings.

No, the IILM Corporation plays the role of the Programme Administrator of the short-term issuance programme. The IILM Sukūk is not issued by the IILM Corporation but by the IILM “Issuer” SPV.

The IILM asset-backed commercial paper is a short-term vehicle with maturity date up to 364 days. Each short-term Sukūk is backed by a pool of highly rated Sovereign Assets.
Therefore, the ability to serve the profit rate and the principal of the IILM Sukūk relies on the income generated by the asset pool and the principal repayment at the maturity of each asset.
Two SPVs (“Holding” and “Issuer”) based in Luxembourg under the program are set-up to ring-fence the underlying assets for the benefit of certificate holders. “Holding” SPV’s role is to acquire and hold the assets, funded by Investment Contribution from “Issuer” SPV, which raises funding through the issuance of short-term certificates via the Primary Dealers.
Under the programme, Certificates represent undivided beneficial ownership in the asset pool, which is held beneficially on trust by “Holding” SPV for “Issuer” SPV, which in turn holds the beneficial interest on trust solely for the Certificate holders.

No, every dollar of outstanding issuance in the market is backed by a dollar of an asset held in the IILM asset portfolio.

The IILM Corporation acts as Programme Administrator and runs the programme on behalf of the two SPVs based in Luxembourg. The two SPVs are set up to ring-fence the underlying assets for the benefit of Certificate holders and limits the recourse of the Certificates to the IILM asset pool.

The proceeds of each issuance are invested in the asset pool. The asset pool underlying the issuances is made up of assets structured in accordance with Shari’ah principles, namely Sukūk. The Sukūk are not listed, they are only private placements.
The providers of the assets must comply with strict criteria that are verified and monitored by S&P at the structuring stage and on a monthly basis then after. Each asset obligor has to be a sovereign, sovereign-linked or a supranational and must carry a credit rating of at least “A/A2/A” by S&P, Moody’s or Fitch. Each Asset transaction is monitored and approved by the IILM Shari’ah Committee, and the IILM Board Executive Committee.

A Bond is a debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the interest (if any) and principal at later specified dates. Even though Sukūk and Bonds share similar characteristics in substance such as periodic payment and long-term funding, both are structured differently. Sukūk represent a proportionate beneficial ownership in an underlying asset where the holder receives the income stream of this same underlying asset. This why we speak about “profit rate” for a Sukūk instead of “interest rate” for a bond.
Hence, Sukūk are commercially identical to conventional bonds. It is an asset-based financing that eliminates the key prohibitions from conventional bonds. The Sukūk is underpinned by an underlying asset which has to be Shari’ah compliant.

Investors must submit their bid to a Primary Dealer who will bid accordingly the day of the auction. The list of the current Primary Dealer is as follows:

1. Abu Dhabi Islamic Bank
2. Al Baraka Turk
3. Barwa Bank
4. Boubyan Bank
5. CIMB Islamic
6. First Abu Dhabi Bank
7. Kuwait Finance House
8. Maybank Islamic
9. Qatar Islamic Bank
10. Standard Chartered Bank

The Primary Dealer infrastructure allows an effective way of ensuring the cross-border liquidity globally. The Primary Dealers are bound by a minimum commitment to each auction and must ensure the distribution of the Sukūk to end-investors. Their international presence facilitates this model.

The bulk of the investors are banks located in the GCC region, up to two thirds of the total investor base in 2019. Despite the strong participation of the GCC-based investors, the IILM Sukūk benefits from a large type of investors based in several continents. 25% of the IILM Sukūk are Supranational/Central banks/Sovereign Wealth Funds. Geographically wise, ~25% of them were in Asia, ~3% in Africa, ~2% in Europe and 3% in Turkey. 80% of the IILM Sukūk investors are Islamic Financial Institutions. These data relate to the whole 2019 year.

Thanks to high tangibility ratio of the asset pool, the IILM Sukūk is tradable on the Secondary Market. The Primary Dealer Agreement includes a secondary market obligation whereby the Primary Dealers must provide a daily two-way price on each series.
In 2022, the secondary market recorded a total of USD 2.2 billion, the highest volume since inception, which represented approximately 16% of the total issuance.

Please refer to the Indicative Issuance Calendar for 2022.

As of today, the IILM does not offer liquidity to Banks. The IILM only provides a USD denominated investment tool through short-term Sukūk issuances in order for the Islamic Financial Institutions to manage their excess liquidity.