Turkey's sovereign sukuk seen raising $1bn
Istanbul, October 2, 2013
Turkey looks set to raise $1 billion from its second dollar-denominated sovereign sukuk issue, according to bankers on Wednesday who said orders for the bond had topped $2.25 billion.
Bids are still being collected and the issue will be completed by the end of the week, they said.
Initial profit rate guidance for the five-year issue is U.S. Treasuries mid-swaps plus 325 basis points, or a yield of around 4.82 percent, bankers said.
Turkey last month mandated HSBC, QInvest and Standard Chartered for the issue.
The country raised $1.5 billion with its debut 5-1/2 year sovereign sukuk in September 2012. That issue yielded 2.803 percent and attracted an order book of nearly five times the size of the offering.
The outstanding sukuk, a March 2018 note, was trading at a cash price of 94.28 or 286 basis points over mid-swaps before this morning's announcement.
Sukuk is an Islamic bond, backed by assets which generate returns for investors.
Islamic finance, which obeys religious principles such as a ban on interest payments, has grown rapidly since the global financial crisis and is now estimated to have well over $1 trillion of assets around the world.
Prime Minister Tayyip Erdogan's government, which espouses Islamic values, had shied away from a sovereign sukuk during its first decade in power, for fear of giving ammunition to critics who accuse it of seeking to roll back state secularism.
Turkey has borrowed $4.2 billion from international capital markets so far this year and plans to borrow a total of up to $6.5 billion through a mix of Eurobond, Samurai and sukuk issues by the end of the year. – Reuters
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