Turkish leasing company Ak Finansal Kiralama (Aklease) raised TRY185 million (US$6.96 million) through a two-year Islamic lease certificate issued by Emlak Varlik Kiralama. The issuance marks the final Sukuk under the energy efficiency leasing firm’s TRY1.5 billion (US$56.4 million) Sukuk program.
Proceeds from the issuance will fund the company’s activities for its financial leasing contracts and acquisitions for both movable and immovable properties, among others.
Aklease is a 100% subsidiary of Turkish conventional bank Akbank. Established in 1988, the company deals specifically in financial leasing activities with a focus on renewable energy, energy efficiency and resource sustainability.
According to Esma Karabulut, the head of investment banking and investor relations at Emlak Participation Bank, which owns the issuer Emlak Varlik Kiralama, some of the underlying assets for the Sukuk were sustainable assets even though the facility was not issued under an explicitly sustainable program.
“Since the approval we received from the Capital Markets Board is for a traditional Sukuk program, we were unable to proceed with this Sukuk issuance as a sustainable Sukuk. Nevertheless, in the upcoming periods, Aklease may submit an application to the Capital Markets Board for sustainable, green Sukuk issuances within the scope of the relevant regulations,” Esma explained.
The two-year tenor of the Aklease Sukuk notably differs from its counterparts in the Turkish capital market. Due to the economic and inflation environment, Turkish facilities generally are money market issuances with high returns, with Sukuk instruments having an average maturity of about three months.
According to Esma, securing investor demand for the two-year Sukuk was challenging due to pricing uncertainty in the market. It was able to attract investors as a result of calculated considerations for timing and pricing.
The participation bank also anticipated an increase in cost for the issuance considering the recent tight monetary and fiscal policies implemented in Turkiye to curb inflation and ensure financial stability.
While Aklease has maxed out its existing Sukuk program, Esma shared that the company is looking to issue further Islamic facilities under a new TRY2.5 billion (US$94 million) program.
The soon-to-be-lodged Sukuk program will constitute a TRY1 billion (US$37.6 million) upsize from its current program. The company will seek the Capital Markets Board’s approval for the new program in the near future.
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Aklease’s August 2023 Sukuk facility TRY185 million (US$6.96 million)  23rd August 2023 |
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| Summary of terms and conditions | |
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Issuer |
Emlak Varlik Kiralama |
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Obligor |
Ak Finansal Kiralama |
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Size of issue |
TRY185 million (US$6.96 million) |
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Mode of issue |
Sale to qualified investors |
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Purpose |
To finance leasing contracts |
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Tenor |
Two years |
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Profit rate |
39.5% |
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Payment |
Once every three months |
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Currency |
Turkish lira |
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Maturity date |
26th August 2025 |
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Governing law |
Turkish law |
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Rating |
‘B-’ by Fitch Ratings for Ak Finansal Kiralama |