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Turkey’s Aktif Bank gets nod to raise $120 million via sukuk

January 31, 2017 11:21 am

Traders walk on the floor of the Borsa Istanbul in Istanbul, Turkey February 29, 2016. REUTERS/Murad Sezer

Aktif Bank, Turkey’s largest privately-owned investment bank, has received regulatory approval to sell up to $120 million via Islamic bonds, or sukuk, in what could be a rare deal in the international sukuk market.

Turkey has seen steady issuance of sukuk from the government and the country’s Islamic banks, known domestically as participation banks, but corporate issuance remains rare and even more so through dollar-denominated deals.

Aktif Bank will sell the sukuk to foreign investors through its asset leasing company, Aktif Bank Sukuk Varlk Kiralama, according to the country’s Capital Markets Board. It gave no timeframe for the deal or the third party seeking the financing.

In Turkey, sukuk transactions are conducted via asset leasing companies such as the one established by Aktif Bank or other financial intermediaries.

Companies can sell sukuk directly by setting up their own asset leasing companies, but the process can be onerous for smaller firms, limiting corporate sukuk deals.

The government has previously granted tax exemptions for lease-based sukuk, but in August it extended those incentives to all other types of sukuk contracts.

In 2013, Aktif Bank helped raise a one-year 100 million lira sukuk for construction-to-energy firm Agaoglu Group, while conglomerate Dogus Group and Turk Telekomunikasyon have also considered sukuk deals.

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By Reuters
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