Turkish treasury issues sophomore Sukuk today - IFN

Turkish treasury issues sophomore Sukuk today

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TURKEY: The Turkish treasury will be issuing its second Sukuk for the year today, the 21st August, with an aim to raise approximately TRY1.81 billion (US$931.08 million). According to a statement by the Turkish treasury, the Sukuk was sold via a direct sale method, with total demand from investors successfully reaching the intended issuance price. The lease certificates carry a maturity period of two years, due on the 19th August 2015, and will be traded on the Borsa Istanbul Debt Securities Market. Based on the deal’s investor prospectus, the rate for the lira-denominated Sukuk is fixed at 4.5% and is payable every six months. Proceeds from the issuance will be used to diversify borrowing instruments, broaden the republic's investor base and increase domestic savings. According to an industry source in Turkey, the structure of the lease certificates is typical to what is traditionally issued by the Turkish government. The sovereign first entered the market in September 2012 with a similar US dollar-denominated asset-backed lease certificate which successfully raised a total of US$1.5 billion. This was followed by a lira-denominated Sukuk Ijarah a month later, worth TRY1.6 billion (US$819.75 million). According to a recent report by Markaz, Turkey last sold a two-year Sukuk worth TRY1.52 billion (US$778.76 million) in February. The Turkish treasury had previously come to the market announcing its intention to issue Shariah compliant papers at least twice a year in order to build a healthy Sukuk yield curve in the republic. Earlier in May, HSBC projected that Sukuk sales in Turkey bears the potential to hit the US$3 billion mark this year, and based on data by Dealogic, Sukuk deals out of Turkey have already reached US$2.2 billion for the first eight months of 2013; signalling that the republic is well on track to achieve the figures that have been set out. The issuers that have tapped the republic’s domestic Islamic capital market so far include Albaraka Turk Katilim Bankasi, Turkiye Finans Katilim Bankasi, as well as the Turkish government.