The First Sustainable Subordinated Sukuk İssuance Of Turkey And The World From Kuveyt Türk
Having made the first sukuk transaction in Turkey and in Continental Europe in 2010, Kuveyt Türk made a breakthrough once again and performed the "Global Sustainable Tier 2 Subordinated Sukuk Issuance" for the first time in Turkey and in the world, in line with the principles of participation finance.
Having introduced Turkey to the interest-free capital markets by making the first sukuk transaction in Turkey and Continental Europe in 2010, Kuveyt Türk made a breakthrough once again in the field of sukuk, this time by performing the "Global Sustainable Tier 2 Subordinated Sukuk Issuance" for the first time in Turkey and in the world.
Bank ABC, Citibank, Dubai Islamic Bank, Emirates NBD Capital, KFH Capital, and HSBC were authorized as joint coordinators and book-building for issuance was carried out recently. Kuveyt Türk's sustainable sukuk issuance, with a 10-year maturity of $350 million and an early redemption option at the end of the 5th year, received more than $4.3 billion in demand by more than 150 investor organizations in a wide geographical scope including Continental Europe, United Kingdom, USA, Asia, and Gulf.
More than 12 times demand and many firsts...
Thanks to the intense interest of the investors, the amount of demand exceeded 12 times the sukuk issuance and brought Kuveyt Türk the best pricing of Tier 2 that has been issued from Turkey since 2017, with a rate of 6.125%. Reaching a high number of participants, the issuance was distributed to nearly 100 investors by reaching an investor diversity. 20% of the distribution was made entirely to green/social fund investors. The export itself contains many breakthroughs:
- The first sustainable Tier 2 sukuk issuance of Turkey and the world.
- Tier 2 with the lowest price issued from Turkey since 2017.
- The transaction with the highest demand that Kuveyt Türk has received so far.
- The issuance with the second-highest number of demands among financial institutions in Turkey.
In addition to sustainability, Kuveyt Türk will increase its already strong consolidated capital adequacy ratio by 389 basis points, through the sukuk issued in subordinated format.
"We are gradually increasing our financing support for sustainable projects"
Ufuk Uyan, General Manager of Kuveyt Türk, said, "We are very glad and excited to issue the first Sustainable Tier 2 Sukuk of Turkey and the world. Sustainability, the importance of which has been better understood at the global level in recent years, is at the forefront of the agenda of the financial world, as it is in many other sectors. As Kuveyt Türk, we conduct studies in many different fields from environmental and social credit evaluation systems to green products and services, from waste management to savings plans, from integrated corporate social responsibility projects to governance priorities and we take important steps in this field in cooperation with environmental and social institutions. We are gradually increasing our financing support for sustainable projects in the field of renewable energy. In this context, with the vision of sustainability, we consider the diversification of financial products and services, especially sukuk, important for the development of the sustainable finance ecosystem in our country. We have performed the first sukuk transaction in Turkey in 2010. Once again, we have made a breakthrough and successfully carried out the first Sustainable Tier 2 Sukuk issuance of Turkey and the world, in line with the principles of participation finance, with the deep interest we received from investors. We will continue to increase our sustainable resource diversity and funding in this field where we have taken a strong step forward."
The resource will be transferred to green and social projects of Kuveyt Türk
Thanks to the transaction, which is the first Sustainable Tier 2 Sukuk Issuance of the world, Kuveyt Türk has taken a new step in the field of sukuk. The main point that distinguishes the transaction from other sukuk issuances of Kuveyt Türk and the market is the ESG (Environmental-Social-Governance) structure it has. This way, the funds obtained from the certificates will be transferred to the green and social projects of Kuveyt Türk throughout the term of the sukuk. Relevant projects will be selected in line with participation finance principles, as well as the Sustainable Finance Scope Documents and the second-party opinion received from a global environmental consultancy company. Sustainable sukuk issuance with ESG structure also demonstrates the support of Kuveyt Türk, which has a strong SME portfolio and is also one of the sector leaders in renewable energy funding, for both green and social funding.
About Kuveyt Türk
Kuveyt Türk was established in 1989. Bringing its distinguished financial products and services together effectively with savers and investors, Kuveyt Türk maintains its leading position in the sector thanks to its customer-oriented approach, technology-innovation studies, and steps taken on the way to digital transformation. Being the first participation finance institution to take a step in the field of gold, Kuveyt Türk also performed the first sukuk transaction of the sector in Europe and Turkey. Establishing the first R&D center in Turkey built by a financial institution in 2010, Kuveyt Türk is the only financial institution in Turkey to have two R&D centers today. Among the projects developed in the R&D center, there are also projects such as XTM, which is a first in the world, where video calls and self-service transactions can be performed together. As of today, Kuveyt Türk provides services through 441 branches in Turkey and continues its activities abroad through its Bahrain branch and its German subsidiary KT Bank AG. In addition to its operational works, Kuveyt Türk has undertaken significant social responsibility projects based on social values and protecting cultural assets, and has undertaken many restoration projects and produced permanent works such as books and documentaries in line with the strategy of "We grow with our values".