Sep 28 2012
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"KFH" arrange in cooperation with Citigroup and HSBC the first Sukuk issuance for the Turkish Treasury of USD1.5 bln
Sukuk issue oversubscribed 5 times from 250 investors around the world
2.8 yield rate on Sukuk and 58% of the subscribers are from the Middle East
Kuwait Finance House
" represented by its subsidiary, Liquidity Management House "LMH", succeeded in arranging for Ijarah Sukuk for the Turkish Treasury amounting USD1.5bln for 5 ½ years, in cooperation with Citigroup and HSBC, where this is the first issuance of its kind for the Government of Turkey.
The deal was signed by the CEO of KFH and Chairman of KFH - Turkey, Mohammed Al-Omar, and the Vice Chairman and CEO of LMH, Mr. Emad Al-Monayea. The issuance witnessed a large turnout exceeded expectations. 250 investors have requested to participate in the issuance totaling USD7.1bln (i.e. 5 times oversubscription coverage). This reflects the great confidence in the Turkish economy, and in those who lead the issuance process. Furthermore, it reflects the confidence of the global financial markets in sukuk product.
This typical issuance is a fruit of cooperation between many entities, particularly the Turkish Treasury that exerted great efforts to develop legislative and regulatory frameworks for the issuance of this sukuk and other instruments. Furthermore, if the government of Ankara wishes any further issuance, now it has a clear and steady legislative building could enables Turkey to become an important and prominent market for sukuk issuance. Thus, Turkey will benefit from the high demand for this product from investors in the region and the whole world.
In this regard, KFH expresses through its subsidiary LMH its readiness to assist the governments wishing to introduce sukuk, which are considered the Shara'i alternative to bonds, to their economic systems. They also can benefit from the advantage of the high financing capacity of sukuk in promoting the national economy and providing alternative funding.
As for the investors' type, the largest share is for banks (59%) followed by asset managers (22%). Moreover, international institutions and central banks formed 10%, then wealth managers (5%), and finally hedge funds (4%).
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