Moody’s affirms Islamic Development Bank’s AAA rating

Moody’s Investor Services has affirmed its AAA credit rating with a stable outlook for the Islamic Development Bank, driven by the financial institution’s robust asset performance.

In a press release, IsDB said that its short-term issuer rating has been affirmed at Prime-1 by the US-based agency, the highest tier on offer.

IsDB has been rated AAA by Moody’s since 2006, the statement added.

According to the agency, obligations rated AAA are judged to be of the highest quality and are subject to the lowest level of credit risk, while Prime-1 denotes the best ability to repay short-term debts.

Founded in 1973 and headquartered in Jeddah, IsDB is a multilateral development finance institution focused on Islamic finance for infrastructure development.

“The affirmation reflects Moody’s expectation that IsDB’s capital position and asset performance will remain robust, supported by the strong liquidity and funding position, low funding costs, and the bank’s preeminent position as one of few regular issuers of highly-rated benchmark-size sukuk in the international capital markets,” said IsDB in the press statement.

The financial institution added that its strong credit profile also benefits from the track record of member country support demonstrated through a series of general capital increases.

IsDB also said that its leverage ratio is expected to remain significantly below the median for AAA-rated multilateral development banks, driven by such capital increases.

The institution currently has 57 members, with the largest single shareholder being Saudi Arabia with 22.5 percent of the financial institution’s total capital.

Libya and Indonesia follow, holding a capital of 9.03 percent and 7.04 percent, respectively.

Since its inception, IsDB has provided long-term sustainable and ethical financing structures to its member nations to achieve development and economic growth.

“IsDB remains committed to supporting its member countries in achieving sustainable development and economic growth through these strategic projects. These investments not only address immediate needs but also lay the foundation for long-term resilience and prosperity,” according to its website.

In June, IsDB allocated $165 million for the construction and operationalization of green, resilient, and sustainable schools in earthquake-affected and earthquake-prone areas in Turkiye.

In the same month, it also provided $156.3 million to Turkmenistan to develop three oncology centers and training of health care providers.

In June, IsDB also allocated $47.68 million to Suriname to enhance the country’s power transmission and distribution network.