Dubai: Turkey plans to launch a dollar-denominated sukuk to plug its budget deficit, sources said on Tuesday, joining the sovereign issuers in the Gulf ahead of an expected interest rate hike by the United States.
The details on the size, pricing and tenor would be released within the next few days, sources with the knowledge of the matter told Gulf News.
“We expect strong response, looking at investor interest in the space,” Anita Yadav, head of fixed income research at Emirates NBD said.
Officials from the central bank of Turkey were in Dubai on Tuesday for a roadshow, which also included officials from Emirates NBD, which has been mandated to do the deal.
The sukuk issue would come a week after Qatar surprised markets by increasing its Eurobond to $7 billion (Dh25.71 billion), which was priced at a premium. Abu Dhabi’s $5 billion also received robust response and was oversubscribed 2.5 times. For the Abu Dhabi issue, which took place last month, the 5-year notes came in lower than Qatar at 85 basis points over US Treasuries.
Growing trend
“There is a growing trend of sukuk and bond issuances, adding to the ongoing ranks of the Middle East,” Yadav said.
Turkey has been a regular issuer of sukuk outside of the Gulf Cooperation Council, joining countries like Indonesia and Malaysia. Turkey, which is a diversified economy, has a GDP of $750 billion, and is running a current account deficit of 4 per cent to GDP, often resorting to conventional bonds and sukuk to plug this shortfall. Turkey has also drafted a bill that would seek to harmonise tax treatment of Islamic finance contracts and encourage longer maturities in the sector.
In March, Turkey set-up three Islamic finance working groups to study issues ranging from extending maturities, taxation and product diversification in the industry.
