The second rating received by the IILM from Fitch reaffirms the strong fundamentals of the IILM Ṣukūk and solidifies the IILM’s Ṣukūk programme that serves the global financial services market’s need for Shari’ah compliant instruments
Kuala Lumpur, Malaysia – 28 September 2022.
Today, the International Islamic Liquidity Management Corporation (IILM), an international organisation that develops and issues short-term Shari’ah-compliant financial instruments, is pleased to announce that it has received a second international short-term credit rating from Fitch Ratings of “F1” for its USD 4 billion short-term Ṣukūk programme, marking a major milestone in the organisation’s 12-year history.
The assignment of a second programme rating by Fitch marks a key step towards strengthening the IILM Ṣukūk as a highly-rated, robust Islamic financial instrument for the benefit of cross-border liquidity management. The rating by Fitch reflects the intrinsic strengths of the IILM and risk profile, and is expected to broaden the IILM’s investor base and thus enhance the liquidity of the Ṣukūk.
The IILM’s Ṣukūk Issuance Programme benefits from 100% liquidity, according to Fitch’s rating methodology and is supported by 10 Primary Dealers’ commitment. Fitch also noted that the credit quality of each asset currently funded by IILM is commensurate with the “F1” rating on the programme.
The IILM is the only provider of cross- border Islamic liquidity management solutions in the short-term space with a high credit quality instrument backed by a pool of Sovereign, Supranational and Sovereign-linked obligations. The IILM Ṣukūk also have been granted the appropriate High Quality Liquid Asset (HQLA) regulatory treatment in various jurisdictions. Besides, it is widely acceptable under Shari’ah principles as its structure complies with AAOIFI standards with circa 80% of tangibility ratio.
H.E. Khaled Mohamed Balama, Governor of the Central Bank of the United Arab Emirates and Chairman of the IILM’s Governing Board, said: “The second rating received by the IILM from Fitch reaffirms the strong fundamentals of the IILM Ṣukūk and solidifies the IILM’s Ṣukūk programme that serves the global financial services market’s need for Shari’ah compliant instruments. The IILM will continue to supply high quality Shari’ah-compliant instruments to meet the ever-growing demands of Islamic investors.”
H.E. added: “I commend the IILM Board for their efforts in achieving this milestone”.
Dr. Umar Oseni, Chief Executive Officer of the IILM, said: “We are indeed very delighted with this major achievement. As a pioneering institution, the IILM plays a unique role by supplying Institutions offering Islamic Financial Services (IIFS) with additional tools to manage their liquidity. Being given a second international rating from Fitch, one of the world’s top credit rating agencies, is a testament to the high quality of our liquidity management solutions. Investors who have been eyeing the IILM’s Islamic papers but have yet to come on board can now be comforted and assured of its quality, with a second rating in place.”
The IILM’s short-term Ṣukūk programme is also rated “A-1” by S&P since its inaugural Ṣukūk issuance in 2013 and currently has an outstanding issuance amount of USD 3.51 billion.
The Ṣukūk programme has a nine-year track record with a total of 189 issuances to date, from 2-week to 12-month tenor, amounting to a total of more than USD 85.97 billion as at end September 2022. The IILM’s short-term Ṣukūk are issued monthly to address the various demand for high quality assets from IIFS.
In 2021, the IILM issued USD 14.12 billion across 36 short-term Ṣukūk issuances to the market, with a monthly supply of three different tenors, namely 1-month, 3-month, and 6-month Ṣukūk. This accounted for 27% of the total global USD Sukuk issuances last year and positioned the IILM as one of the top USD Ṣukūk issuers.
The IILM also unlocked a key achievement this year when it issued its first ever 12-month short-term “A-1” rated Ṣukūk in July. The demand for the USD 250 million tranche reached 1.85 times the issuance size. The successful inaugural issuance by the IILM addresses a long-standing demand from investors for such tenor in the Islamic finance space.
The IILM’s short-term Sukῡk is distributed by a diversified network of 10 primary dealers globally, namely Abu Dhabi Islamic Bank, Al Baraka Turk, Boubyan Bank, CIMB Islamic Bank Berhad, Dukhan Bank, First Abu Dhabi Bank, Kuwait Finance House, Maybank Islamic Berhad, Qatar Islamic Bank, and Standard Chartered Bank.
About the IILM
The International Islamic Liquidity Management Corporation (IILM) is an international organisation established on 25 October 2010 by central banks, monetary authorities and multilateral organisations to develop and issue short-term Shari’ah-compliant financial instruments to facilitate effective cross-border liquidity management for institutions that offer Islamic financial services (IIFS).
The current members of the IILM Governing Board are the central banks and monetary agencies of Indonesia, Kuwait, Malaysia, Mauritius, Nigeria, Qatar, Turkey, the United Arab Emirates, as well as the multilateral Islamic Corporation for the Development of the Private Sector.
Membership of the IILM is open to central banks, monetary authorities, financial regulatory authorities or government ministries or agencies that have regulatory oversight of finance or trade and commerce, and multilateral organisations.
The IILM is hosted by Malaysia and headquartered in Kuala Lumpur.
The International Islamic Liquidity Management Corporation (IILM)
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Download the Arabic version of the press release here.