Business | Banking
Turkey's first Islamic bond offering oversubscribed
Financial institutions buy big as Kuveyt Turk pays coupon of 5.25%
- Gulf News Report
- Published: 00:00 August 26, 2010
- Image Credit: Bloomberg
- Turkish 100 Lira notes are counted at a bank in Istanbul, Turkey. The country's- and Europe's - first Islamic bond offering was oversubscribed, sources say.
Dubai: Kuveyt Turk Katılım Bankasi, a subsidiary of Kuwait Finance House, will pay a coupon of 5.25 per cent on Turkey's first Islamic bond offering that was oversubscribed, people close to the transaction said Wednesday.
Kuveyt Turk launched the three-year $100 million (Dh367.2 million) sukuk on August 17. The instrument was primarily bought by financial institutions.
This is the first ever sukuk from Turkey and the first bank sukuk originating from Europe, according to law firm Norton Rose, which advised on the offering.
The sukuk is issued by KT Turkey Sukuk, an orphan special purpose vehicle incorporated in the Cayman Islands.
Sharia-compliant
The portfolio underlying the issuance has been tailored to ensure that the cash flows supporting payments to sukukholders will be Sharia-compliant, Norton Rose said in a statement.
In a mix of Murabaha and Ijara receivables, not less than 51 per cent will be derived from Ijara contracts, it said.
"This is another significant step towards growing Islamic finance in Europe.
"The sukuk by Kuveyt Turk further demonstrates continuing interest and appetite for Islamic finance within key emerging economies," Neil D. Miller Global Head of Islamic finance at Norton Rose (Middle East), said in the statement.
The joint lead managers on the transaction were Citigroup Global Markets and Liquidity Management House.
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