Mali’s maiden Sukuk issuance stumbles over investor from Botswana

Having planned to issue maiden Sukuk worth XOF150 billion (US$258.65 million), Mali only raised a third of the sum due to the withdrawal of a private investor, IFN exclusively reveals. MARC ROUSSOT lifts the veil on this story.

The expected ‘hooray for Africa’ never came following Mali’s maiden Sukuk issuance, as the decision of a private investor from Botswana to pull out from the deal caused a big hoo-ha.

Although the 15-day subscription period was extended by a week until the 23rd February 2018, President Ibrahim Boubacar Keita’s administration was left with no choice but to downsize its Sukuk Ijarah paper to XOF49.95 billion (US$86.13 million) from its initial XOF150 billion target.

Paradoxically, the Sukuk issuance facilitated by the Islamic Corporation for the Development of the Private Sector was initially oversubscribed with bids amounting to XOF176.43 billion (US$304.23 million).

Proceeds from the transaction were to finance a program of 4,915 social housing units comprising the construction of 1,250 units, but with Mali falling short of its Sukuk target, it is unclear how the real estate program will be funded.

In a daze
The motives behind the sudden U-turn of the investor from Botswana are unclear. Insecurity in the country which has been destabilized by Jihadi-inspired extremist groups since 2012 may be one of the reasons, hypothesizes Ibrahim Boubacar Ba, a special advisor to the president of Mali.

While it did not proceed as planned, the deal however underlined the genuine and growing interest of West African countries in tapping the Islamic capital market as Mali became the region’s fourth country to issue sovereign Sukuk, after the Ivory Coast, Togo and Senegal, which all listed their Sukuk on the West African Regional Stock Exchange in October 2016.

To date, Mali’s Sukuk facility has not been listed and it is unclear if it ever will be, even though the prospectus addresses such a possibility.

Once bitten, twice shy?
Campaigning for his reelection, President Ibrahim Boubacar Keita pledged to promote Islamic finance during his second five-year term. However, he did not elaborate on a potential sophomore Sukuk issuance.

One issuance is scheduled for 2019, according to the Ministry of Economy and Finance’s debt issuance plan revealed in February. Yet, the authorities have not disclosed if the 10-year facility will be a conventional bond or Sukuk, shares Monique Obre, the director of market intermediaries at the Regional Council for Public Savings and the Financial Market, a body linked to the West African Monetary Union.

This article first appeared in IFN Volume 16 Issue 12 on the 27th of March 2019

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