Saudi IDB says rule change may cut debt issuance

The Saudi-based Islamic Development Bank (IDB) is considering cutting the amount of cash it must keep on its books in a move which could reduce its need to tap the debt markets for funds, a senior official told Reuters.
Mohammad Tariq, advisor to IDB ISDBA.UL president Ahmed Mohamed Ali, told Reuters the IDB currently holds the equivalent of 40 percent of its investment commitments on its books, but will decide within four months whether to change this measure to a system more closely matching short-term inflows and outflows.
"We are reviewing our liquidity policy right now and we may change it; in that case it is most likely that we may lower the bar in line with other multi-laterals and in that case our borrowing needs will come down because we would have spare cash," Tariq said at the Reuters Islamic Banking and Finance Summit in London on Monday.
The IDB finances projects in Muslim countries and operates in a similar way to the European Investment Bank (EIB).
It already uses a net cash requirement system to monitor cash flow but is now considering making this formal policy.
Earlier this month, Mohamed Ali told Reuters the IDB plans to issue Islamic bonds, or sukuk, to raise up to $5 billion over the next five years.
Tariq told the Reuters Islamic Banking and Finance Summit on Monday the bank has calculated gross financing commitments to be $7 billion in the period.