Malaysia-based International Islamic Liquidity Management Corp (IILM) will expand its Islamic bond programme by $370 million to $860 million next week, increasing its issuance of short-term sukuk for the first time since its launch last year.

The IILM, a consortium of central banks from Asia, the Middle East and Africa, will conduct the auction of three-month sukuk on Jan. 20, according to a filing with Malaysia's central bank.

IILM sukuk are designed to meet a shortage of highly liquid, investment-grade financial instruments which Islamic banks can trade to manage their short-term funding needs.

The IILM sold $490 million worth of three-month paper in separate auctions in August and November, while its plans call for increasing issuance of sukuk to as much as $2 billion.

In November, the IILM also expanded the number of primary dealers handling its Islamic bond programme to nine from seven, adding Abu Dhabi Islamic Bank and CIMB Bank Bhd .

Shareholders of the IILM are the central banks of Indonesia, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Turkey and the United Arab Emirates, as well as the Jeddah-based Islamic Development Bank.-Reuters