EMLAK KATILIM’S SUKUK: MEETING MARKET DEMAND
Turkiye Emlak Katilim Bankasi, the youngest participation bank in Turkey as it started operations in March 2019, issued Turkey’s first-ever Mudarabah poolslinked Sukuk Wakalah at TRY100 million (US$12.59 million) in June 2020. NESSREEN TAMANO has the details.
With a long-term tenor — different from the usual short-term local Sukuk papers in Turkey that have tenors of around three or four months — the bank is providing long-term funding for long-term requirements through the issuance of Mudarabah pools-linked Sukuk. Parked under Emlak Katilim’s TRY5 billion (US$629.25 million) Sukuk Wakalah program established in April 2020, the issuance was oversubscribed two times its issue size despite its competitive pricing, closing at TRY200 million (US$25.17 million).
“The transaction was a test for Emlak Katilim to see the demand from the market,” the bank said, adding that the response to the Sukuk is an indication of investors’ confidence in Emlak Katilim. “Around 95% of the demand was received from Shariah compliant portfolio management companies.”
The paper was issued by way of a trade sale to qualified investors, and shall be distributed to the holders together with the principal sum on the 29th January 2021. The periodical yield of the Sukuk will be calculated every three months and distributed to Sukukholders in line with revenues obtained from the underlying assets. The bank had previously established a TRY2 billion (US$251.7 million) Sukuk Wakalah program in March 2020. So far, under both programs, it has issued Sukuk worth a total of TRY2.8 billion (US$352.38 million) with 18 tranches. Emlak Katilim, the third state-owned Islamic bank in Turkey, was founded in 1946 as a conventional bank before it was forced to close in 2001 due to losses, and then revived in February 2019 as a participation bank. It last tapped the Islamic capital market in April 2020 with a TRY200 million Sukuk issuance.