Kuveyt Türk’s sukuk offered investors a relatively high yield on an Islamic instrument from an investment grade company.
Following a comprehensive roadshow that took place at the end of last year, which covered Hong Kong, Singapore, Dubai, Abu Dhabi and London, the company was able to issue a Tier II Basel III dollar denominated sukuk.
The turmoil experienced by the international markets, and especially emerging markets, at the beginning of the year created a tough backdrop for the issuer.
Kuveyt Türk was keen to limit the execution risk that was prevalent at the time of issuance, which was successfully achieved by securing anchor orders ahead of pricing guidance and by minimizing the execution timeline. This helped insulate the company from some of the volatility seen in the region’s markets and EMs more broadly.
“Investors search for reputable and credible obligors to invest in during turbulent markets. Kuveyt Turk stands out from its competition as a solid credit and was able to attract the attention of the investors searching for such companies,” said Bariş Baydar, Senior Associate, Investment Banking, QInvest, one of the joint lead managers and bookrunners on the transaction.
The 10 year transaction due in February 2026, which priced on February 8 with initial price thoughts of 8%, issued on February 17 with a coupon of 7.90%, or 670bp over 5 year midswap rates.
The sukuk was awarded a BBB- rating by Fitch, and benefitted from the strong credit rating of the company.
“As the leading Islamic bank in Turkey, Kuveyt Türk carries a strong rating of BBB from Fitch. Considering the solid financial status of Kuveyt Türk along with the bank’s market leadership, the sukuk was a sound credit from an investment perspective,” Baydar noted.
He added that as a result, there was a considerable demand in the market for this transaction, which enabled the pricing to be tightened.
The majority of the demand for the bond, 94%, originated from the MENA region, and included dedicated Islamic accounts and anchor orders. The remainder of the orderbook was made up of European accounts. Both Islamic and conventional banks and fund managers made up the orderbook.