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deals of the year
case study
Supporting Egypt through difficult times
Sovereign Deal of the Year
The International Islamic Trade Finance Corporation
(ITFC) fosters 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 Organization of
Islamic Cooperation (OIC) in order to promote IDB Group’s
strategic developmental objectives.
Operating to world-class standards, 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”.
Pumping energy into the Egyptian economy
The US$2.2 billion financing program signed between ITFC and
the Government of Egypt came at a critical time for Egypt and
helped the government in reducing the pressure on the foreign
Summary of terms & conditions
Instrument
Syndicated Murabahah financing
Issuer
ITFC, member of the IDB Group
Issuer principal Shariah compliant trade finance
activities
Issue size & Pricing US$2.2 billion over three years
Date Issuances (US$1.2 billion on the 8 th March 2012) &
(US$1 billion on the 1 st October 2012)
Arranger
International Islamic Trade Finance
Corporation (ITFC)
Legal counsel for IDB legal department
issuer
Guarantor
Government of Egypt, represented by the
Ministry of Finance
Shariah advisor IDB legal department
Purpose of issue To finance imports of strategic
commodities such as petroleum and
petroleum products as well as wheat and
other foodstuffs
Transaction Flow
Beneficiary (3) Shipment Supplier
(2) Murabahah Agreement
(7) Repayment
of Sale Price at
Maturity
(6) Sale of
Shipment
(5) Payment of Purchase Price
(4) Payment of
Purchase Price
(8-a)
(4-a)
(8-b)
(4-b)
(8-c)
(4-c)
(8) Repayment of
Sale Price
Participant Participant Participant
(1) Mudarabah Agreement
1. ITFC signs a Mudarabah Agreement with each of the participants (participating banks/financial institutions)
2. ITFC signs a Murabahah Agreement with the beneficiary (Government of Egypt represented by various government entities such as
the Egyptian General Petroleum Corporation and the General Authority for Supply Commodities).
3. The supplier ships goods (petroleum, petroleum products, wheat or other foodstuff) to the Beneficiary.
4. ITFC receives contributions from the participants on pro-rata basis to cover the value of the shipment.
5. ITFC makes a payment/disbursement directly to the supplier for the quantities shipped.
6. ITFC sells the shipped goods to the beneficiary on Murabahah basis (cost plus agreed upon markup).
7. On the due date, the beneficiary pays the due amount to ITFC.
8. ITFC distributes back to the participants their principal plus their share of the profit generated from the Murabahah transaction.
18 March 2013