As its maiden Sukuk issuance was undersubscribed at the end of the two-week subscription period, Mali allowed investors to bid until the 23rd February to meet its XOF150 billion (US$281.67 million) target — a situation that the sovereign had not encountered throughout its two conventional issuances. MARC ROUSSOT reports.
Failing to raise XOF150 billion by the 16th February, marking the end of the subscription period, Mali allowed investors to bid for an extra week to meet the target of its debut Sukuk offering (see IFN Report Volume 15 Issue 07: ‘Mali to join regional Sukuk sphere with debut seven-year paper’).
Mali had not experienced such a situation during the issuance of its debut bond in 2016. In fact, it actually ended its offer period that was planned to run from the 25th April until the 16th May after only a week, as its XOF65 billion (US$122.06 million) offering was oversubscribed by XOF54 billion (US$101.4 million), leading the sovereign to upsize its issuance to XOF100 billion (US$187.78 million).
In 2017, Mali also raised XOF100 billion through a sophomore bond issuance and reached its target within two weeks of the subscription period which started on the 23rd March and initially expected to end on the 14th April.
The profit rate carried by the conventional bonds sold in 2016 and 2017 was also not more appealing to investors as they reached 6.2% and 6.5% respectively, against 6.25% for the Sukuk. In addition, the tenors for both bonds and Sukuk were identical: seven years.
According to Moussa Traore, the head of the Financial Market Department at the National Directorate for Treasury and Public Accounting of the Ministry of Finance, due to communication issues, all bids had not been reported at the end of the two-week subscription period by the five bookrunners, namely, SGI Mali, Coris Bourse, Everest Finance, SGI Benin and Sirius Capital — located in different member countries of the West African Economic and Monetary Union — to the lead arranger, Senegal-based Taiba Titrisation. Hence, inaccurate data showing undersubscription pushed the government to extend the bidding period.
However, Moussa admits that it may have taken more time for Mali to raise funds as the region in general and Mali in particular are experiencing tight liquidity conditions. “In December 2016, the Central Bank of West African States decided to support the interbank market that was encountering some issues by limiting banks’ access to refinancing solutions offered by the central bank. In the end, banks with an excess of liquidity supported those in need of cash. Moreover, the implementation of Basel II and Basel III started on the 1st January 2018,” details Moussa.
IFN understands that at the end of the three-week bidding period, Mali’s maiden Sukuk Ijarah issuance was oversubscribed. The sovereign now intends to list its Islamic paper on the Bourse Regionale des Valeurs Mobilieres, the regional exchange, within three months following the issuance.
This article first appeared in IFN Volume 15 Issue 09 on the 28th of February 2018