KFH-Turkey issues capital boosting $350m sukuk

Abdulaziz Al-Marzouq
Abdulaziz Al-Marzouq

KUWAIT: Kuwait Finance House Turkey (KFH-Turkey) issued Tier 2 capital-boosting sukuk worth $350 million to support its capital situation. The bank has set the yield at 7.9 percent for 10-year tenure. The sukuk will be listed on the Irish Stock Exchange for trading. The credit rating agency “Fitch” assigned an expected rating of BBB- to this tier 2 Basel III-complaint issue.

“This issue represents one of the key issues in KFH-Turkey and is the outcome of collective success. The bank targets boosting its capital adequacy ratio so it can grow and enhance its presence in the international markets, yet obtains the required support and financing from the international markets. This reiterates its robust financial position and healthy expansion plans”, said CEO- KFH-Capital, a subsidiary of KFH, Abdulaziz Nasser Al-Marzouq.

He added that KFH-Turkey mandated KFH-Capital as a global coordinator to arrange the issue, indicating that KFH-Capital played a key role in the issue and contributed in offering solutions in light of the current markets circumstances and the interest rate increase. KFH-Capital managed to coordinate with other banks and investors to issue the sukuk with excellent returns for both the investors and the issuer, and to raise the money needed form the international markets in a record time.

KFH-Turkey mandated international banks and financial institutions led by KFH-Capital as a global coordinator, manager and syndicator, in addition to other lead managers and syndicators which are HSBC, Dubai Islamic Bank (DIB), Nour Bank, QInvest Investment Bank, Emirates NBD, and KAMCO Investment Company.

KFH-Turkey paved the way for the sukuk market in Turkey when it issued debut sovereign sukuk for a Turkish institution in 2010 worth $100 million for a period of 3 years, followed by the 5-year sukuk of $350 million in 2011. In 2014 KFH-Turkey issued 5-year sukuk worth $500 million where it attracted huge subscription valued over $3.25 billion. In 2015, the bank issued 300 million Ringgit with tenure of 5 years as part of a 2 billion Ringgit sukuk program in Malaysia.

Moreover, KFH-Turkey issued a lease certificate (sukuk) of TL160 million. It was the biggest ever lease certificate (sukuk) issuance in Turkish Lira by the private sector in the domestic market. KFH-Turkey surpassed the previous issue size of TL150 million in 2013.

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