KFH-Turkey is­sues five-year sukuk worth $500 mil­lion

Kuwait Times - - BUSINESS -

Kuwait Fi­nance House Turkey (KFHTurkey) has is­sued a five-year Sukuk worth $500 mil­lion. The Sukuk is­suance has been priced Yield­ing 5.136 per­cent. It has been rated BBB by Fitch Rat­ing Agency which re­flects the ro­bust fi­nan­cial po­si­tion of the bank. The Sukuk will be listed on the Ir­ish Stock Ex­change.

“This is­sue is an­other mile­stone for KFH’s in­stru­men­tal role in the Sukuk mar­ket. It is a con­tin­u­a­tion of the se­ries of KFH-Turkey’s suc­cess­ful is­suances that con­trib­uted in the growth of the bank, yet re­flected its abil­ity to at­tract in­ter­na­tional in­vestors. This re­it­er­ates the bank’s strong fi­nan­cial po­si­tion and healthy ex­pan­sion plans,” said KFH-Group CEO Mazin Al-Na­hedh.

“KFH-Turkey man­dated KFH-Cap­i­tal as a global co­or­di­na­tor to ar­range the is­sue in col­lab­o­ra­tion with re­gional and global banks. KFH-Cap­i­tal played a key role in the suc­cess­ful is­suance. De­spite mar­ket volatil­ity, KFH-Cap­i­tal man­aged to co­or­di­nate with banks and in­vestors to achieve an op­ti­mal pric­ing for the Sukuk, which met both the in­vestors and the is­suer’s ex­pec­ta­tion, and raised the amount needed from the in­ter­na­tional mar­kets in a record time,” added AlNa­hedh.

He fur­ther noted that the ini­tial price thoughts (IPT) of the is­suance was set at low 400

Mazin Al-Na­hedh

bps over the 5 year Mid-Swap. Af­ter the IPT’s were re­leased the is­suance drew great in­ter­est from in­ter­na­tional in­vestors, gar­ner­ing or­ders from around 120 ac­counts. The to­tal de­mand rose over 3.8-fold to ex­ceed $1.9 bil­lion. The is­sue was fi­nally priced at 385 bps over 5 year Mid Swap due to strong de­mand and the strong or­der book as­sisted in achiev­ing the best price in com­par­i­son to other re­cent Turk­ish banks bond is­suance.

It is worth not­ing that KFH-Turkey paved the way for the Sukuk mar­ket in Turkey when it is­sued de­but sov­er­eign Sukuk for a Turk­ish in­sti­tu­tion in 2010, fol­lowed by the sec­ond and third is­sues in 2011 and 2014. Af­ter the con­sec­u­tive achieve­ments, KFH-Turkey is­sued Sukuk worth 300 mil­lion Ring­git with ten­ure of 5 years as part of a 2 bil­lion Ring­git Sukuk pro­gram in Malaysia in 2015. More­over, in Septem­ber 2016 KFHCap­i­tal suc­cess­fully acted as Joint lead man­ager & bookrun­ner for the $500 mil­lion is­suance of Shar­jah Is­lamic Bank gar­ner­ing or­ders around $1.6bn, over­sub­scribed more than 3 times. The Sukuk car­ried a ma­tu­rity of five years and Sukuk was priced to yield 3.084 per cent.

Also, KFH-Cap­i­tal led KFH-Turkey Tier 2 Basel III com­pli­ant cap­i­tal-boost­ing Sukuk is­sue worth $350 mil­lion in Fe­bru­ary 2016 to strengthen the bank’s cap­i­tal ad­e­quacy ra­tio. The Sukuk was set to yield 7.9 per­cent for 10NC5 Sukuk. In April 2016, KFH-Cap­i­tal acted as Joint Lead Man­ager and bookrun­ner in $250m Basel III Com­pli­ant Boubyan Bank Tier II 10NC5 Sukuk.

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