Turkish 10-Year Dollar Sukuk Draws Strong Demand At MS+205 bps -Bankers

 Turkey borrowed $1 billion over 10 years on Tuesday at around 4.5 percent via a sovereign sukuk issue, bankers said, its third in dollars since it first entered the global Islamic bond market in 2012.

The bond, which had drawn demand of around $3.4 billion before the London market opened, sold at U.S. Treasury mid-swaps plus 205 basis points, equivalent to a yield of around 4.48 percent, bankers said.

The spread on the country’s previous dollar sukuk, a five-year bond sold in October 2013, was mid-swaps (MS) plus 300 basis points.

Islamic finance, which operates according to religious principles that ban interest and pure monetary speculation, has been growing during the global financial crisis partly because it can draw on a huge pool of religiously-oriented investment funds from the oil-rich Gulf.

Turkey wants to become a major market for Islamic investors from the Gulf and southeast Asia.

But despite espousing Islamic values, the ruling AK Party government shied away from taking the plunge with a sukuk during its first decade in power, out of fear of giving ammunition to critics who accused it of seeking to roll back state secularism by stealth.

This prevented the world’s eighth most populous Muslim nation from participating fully in rapid growth of the industry.

Turkey’s total outstanding dollar sukuk amount stands at $3.75 billion. Its lira-denominated sukuk stands at 6.5 billion lira ($2.93 billion). It first issued a lira sukuk in 2012 and issues two annually.

Note: ($1 = 2.2200 Turkish lira)

Originally published on www.reuters.com