Türkiye Finans’ $500 mln sukuk sale lures investors

ISTANBUL - Hürriyet Daily News

(L to R) HSBC Turkey CEO Martin Spurling, Türkiye Finans General Manager Derya Gürerk, Citibank Turkey CEO Serra Akçaoğlu and Türkiye Finans Assistant General Manager Ali Güney pose after yesterday’s meeting. Company photo

Turkish Islamic bank Türkiye Finans issued a $500 million five-year Islamic bond, also known as a sukuk, in a bid to take its share of the soaring investor appetite for alternative financial instruments as well as Turkey’s ambitious plans to boost its Islamic finance offers.

The sale, which is bank’s first and Turkey’s second largest after the Treasury’s issuance of $1.5 billion worth of sukuks last September, attracted a massive order from 95 global investors at $1.9 billion, which is 3.8-fold the sale. The sale carried a 3.95 percent yield.

“The sale of sukuks, which is continuing increasingly in worldwide markets, has been consolidating its position among important financial instruments,“ Türkiye Finans General Manager Derya Gürerk said during a breakfast meeting with media reporters hosted by the company.

Gürerk said the bank dominated 3.2 percent of Turkey’s small and medium enterprises market’s financing transactions and it would use the liquidity it yielded to expand its presence in the field, which has been staging more competition from larger Turkish banks.

The sale transaction was jointly led by British HSBC and U.S. Citibank, while other underwriters were an Islamic bank majority-owned by Saudi Arabia’s National Commercial Bank and Dubai’s Noor Islamic Bank.

“A sukuk sale this successful is an important contribution to Turkey’s sukuk journey,” HSBC Turkey CEO Martin Spurling said at yesterday’s meeting. He said the willingness of HSBC, last year’s top sukuk issuer, undertaking 24 percent of the world’s sukuk sales, to work in and with Turkey remains as the sector grows, triggered by this kind of massive transaction.

Wide range of investors

Spurling also drew attention to the rising number of investors outside the Middle East who showed interest in sales, while the Türkiye Finans assistant general manager responsible for treasury and financial institutions, Ali Güney, said the demand from the Far East was also at a record in Turkish sukuk sales.

Some 17 percent of the investors were from Europe, 15 percent were from the United Kingdom and 17 percent from the Far East, while the Middle East still remained the top region at 51 percent. Speaking at the meeting, Gürerk also said the bank is set to sell $100 million of sukuks as lease certificates.