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The ITFC And The People’s Republic Of Bangladesh In A Us$855 Million Groundbreaking Deal To Finance The Import Of Crude Oil And Refined Petroleum Products

Total ITFC Financing to Bangladesh tops US$9.6 billion since 2008

(L-R) Dr. Waleed Al-Wohaib, CEO of ITFC, Mr. Mohammad Mejbahuddin Secretary, Energy and Mineral Resources Division, and Mr. Md. Abubakar Siddique, Chairman of Bangladesh Petroleum Corporation (BPC)

Dhaka, April 2012: The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank Group, signed a US$855 million Import Finance Murabaha Agreement with The People’s Republic of Bangladesh (represented by the Energy & Mineral Resources Division) and Bangladesh Petroleum Corporation (BPC), for the import of crude oil and refined petroleum products. The agreement brings together a total of 28 financial institutions including ITFC as participants, which is considered a landmark achievement for being the largest syndication raised by the ITFC for a single client.

The financing was raised in response to Bangladesh’s urgent request to front-load a minimum of US$500 million during the dry period of the first half of the year which is a period of high irrigation need thereby contributing to ensure food security of the country.

This cooperation is in line with ITFC’s mandate to support member countries’ strategic sectors and to improve their trading capacity, and is part of the approved US$2billion 1433H (2012G) annual financing plan to be provided by ITFC to Bangladesh. The total ITFC funding represents one third of the country’s annual financing requirements which currently stands at about US$6 billion. This accomplishment also demonstrates the good standing that the Government of Bangladesh enjoys in  the market as one of the most credible investment opportunities supported by the sovereign credit rating by reputable rating agencies  (BB- and Ba3 by Standard and Poor’s and Moody’s respectively).

ITFC succeeded to mobilize almost 90% (US$755 million) of the total amount from external banks for this trade finance operation. This exemplifies ITFC’s reputation in the market by fostering strong partnerships both locally with Bangladesh Bank but also regionally and internationally thus putting Bangladesh in the map for international investment.

The Agreement was signed during a Ceremony at Ruposhi Bangla Hotel in Dhaka, between Dr. Waleed Al-Wohaib, CEO of ITFC, Mr. Mohammad Mejbahuddin Secretary, Energy and Mineral Resources Division, and Mr. Md. Abubakar Siddique, Chairman of Bangladesh Petroleum Corporation (BPC). Moreover, Honourable Advisor to the Prime Minister for Power & Energy and Honourable State Minister for Power & Energy witnessed the signing, along with High Level Officials from the Energy & Mineral Resources Division, BPC, Bangladesh Bank, Economic Relations Division (ERD) and ITFC.

H.E. Mr. Mohammad Mejbahuddin Secretary, Energy and Mineral Resources Division, in Bangladesh said, “The signing of this landmark syndication truly exemplifies the spirit of cooperation between the People’s Republic of Bangladesh and the Islamic Development Bank (IDB) Group. With cumulative approvals of around US$9.6 billion, the IDB is definitely part of the economic and financial landscape of the Bangladesh economy and a strong reliable partner in its socio-economic development. As sales proceeds only cover 70-75% of the import cost, the IDB through ITFC is playing a leading role to bring the necessary funding and bridge the gap to match the ever increasing demand for energy, particularly, in the current context of volatility in oil prices.”

Commenting on the signing, Dr. Waleed Al-Wohaib, CEO ITFC said, “This ground-breaking US$855 million syndicated Murabaha financing is the result of a long-lasting partnership built over the years on trust and close collaboration with the Government of Bangladesh. Bangladesh is a successful story that will be replicated in other member countries. The sheer number of participants across different continents clearly demonstrates the attractiveness of this financing in the money market and the good standing that the Government of the People’s Republic of Bangladesh enjoys particularly in light of the sovereign credit rating.”

In terms of resource mobilization, all syndications raised by ITFC in the market for the People’s Republic of Bangladesh were always oversubscribed; hence raising the profile of ITFC as the market leader for Bangladesh operations.

It is worth mentioning that ITFC won the 2011 Best Deal of the Year in favor of Bangladesh Petroleum Corporation for a syndicated Murabaha operation amounting to US$420 million, from the well-recognized Trade Finance Magazine by Euromoney.

  

About the International Islamic Trade Finance Corporation – ITFC:

The International Islamic Trade Finance Corporation (ITFC) was established in 2005 and commenced business operations in 2008 with an Authorized Capital of $3 billion, as an autonomous and dedicated trade finance entity of the Islamic Development Bank (IDB) Group. ITFC inherited the pioneering mantle of trade finance expertise and its application of innovative Islamic finance instruments developed over a period of more than 30 years when it was undertaken by various departments in IDB.

This rich heritage and the savoir-faire position ITFC at the forefront of international trade to foster socio-economic development, setting new benchmarks in ethical trade financing and developing innovative Shariah-compliant solutions. In addition, ITFC supports the development of markets and trading capacities of its member countries of the Organisation of the Islamic Cooperation (OIC) in order to promote the IDB Group’s strategic developmental objectives.

Operating to world-class standards, the ITFC’s mission is clear from its mandate to be a catalyst for the development of trade among OIC Member Countries and with the rest of the world. ITFC aspires to be a recognized provider of trade solutions for the OIC Member Countries’ needs; in order to fulfill its brand promise of ‘Advancing Trade & Improving Lives”.

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