ANKARA, March 30 – Turkey borrowed $1.25 billion through a six-year, dollar-denominated sukuk at around 5 percent on Thursday, bankers said, marking its fifth such issuance since entering the global Islamic bond market in 2012. The sukuk, which drew demand of more than $3.7 billion, sold at U.S. Treasury mid-swaps plus 285 basis points, equivalent to a yield of around 4.98 percent, bankers said. The issue increased Turkey’s outstanding dollar sukuk to $6 billion, contributing its aim to become a major market for Islamic investors, especially those from the Gulf and southeast Asia. Unlike the oil-fuelled economies of the Gulf, whose Islamic debt issuance is primarily sovereign, Turkey has a powerful private sector which is increasingly eager to finance international projects using sharia-compliant products. As part of plans to celebrate the 100th anniversary of the founding of the modern republic in 2023, Turkey aims to turn its economic and cultural capital Istanbul into a major financial centre. It foresees $350 billion of infrastructure spending on the project, with Islamic finance expected to be one of the major sources. Islamic finance, which operates according to religious principles that ban interest and pure monetary speculation, has grown since the global financial crisis partly because it can draw on a huge pool of religiously oriented investment funds from the Gulf.
Originally published on www.nasdaq.com