Turkish delight in debut sovereign Sukuk (By IFN)

TURKEY: The Turkish government announced on the 5th September 2012 that it appointed Citigroup, HSBC and Kuwait-based Liquidity Management House for Investment (Liquidity House) as arrangers for an impending US dollar-denominated Sukuk issuance that will be the country’s first sovereign Islamic debt sale. The government also said that roadshows for the debut Sukuk will be held in Asia and the Middle East. First announced in 2003, Turkey has been in a long and uphill journey towards the issuance. A number of reasons have been cited for the delay, mainly lack of legislation. However, the tide has since turned after the government last year introduced rules allowing Sukuk to be taxed at the same rate as conventional bonds. In June this year, Moody’s rated the Turkish government at ‘Ba1’, based on the marked improvement in the country’s public finances and its balance sheet. The ratings agency has now assigned a provisional foreign currency rating of ‘(P)Ba1’ to the country’s proposed Sukuk issuance. Industry pundits have also been quick to predict that a Turkish Sukuk will be a hit with wealthy Gulf-investors; with Turkey’s geographic proximity between Europe and the Gulf seen as another plus point for the country to attract investments. It remains to be seen just how much delight the Sukuk will bring to the market, but with all that Turkey has going for it, Islamic Finance news believes that issuing this sovereign Sukuk could mark just the beginning for the country’s rapidly growing Islamic finance industry.