Kuveyt Turk Katilim Bankasi, a leading Turkish Islamic bank majority-owned by Kuwait Finance House, has issued what is said to be the world’s first regulatory capital Tier 2 environmental, social and governance (ESG) Sukuk paper, which will support its Sustainable Finance Framework.
The fixed-rate resettable sustainability trust certificates facility issued by KT21 T2 Company, the bank’s SPV, was oversubscribed 12 times, receiving an orderbook of US$4 billion.
“The issuance also achieved the tightest pricing for any Tier 2 issuance out of Turkey since 2017, at 6.125%, reflecting strong fundamentals and positive market sentiments,” a statement read. Proceeds from the landmark issuance will be used to finance or refinance eligible green and social projects by the bank.
“We are honored to be in the market with the first-ever sustainable Tier 2 Sukuk issuance globally. Our management philosophy is governed by sustainability which is also very much in line with principles of Islamic finance. We are very happy to be issuing a Sukuk intended to preserve nature, not exhaust it,” noted Ufuk Uyan, CEO of Kuveyt Turk.
Rizwan Kanji, a partner at Akin Gump Strass Hauer & Feld, which acted as the legal advisor to the issuance, added: “This is a ground-breaking transaction which complies with multiple facets including ESG and sustainability, Basel III regulatory capital and principles of Islamic finance. We are delighted to have assisted Kuveyt Turk on yet another first-of-its-kind issuance.”
Kuveyt Turk regularly issues Islamic lease certificates, but its last foray into the international Sukuk market was a US$500 million Sukuk Wakalah paper issued in 2016 that was oversubscribed four times.
|Kuveyt Turk’s Sukuk |
16th September 2021
|Trustee||KT21 T2 Company|
|Obligor||Kuveyt Turk Katilim Bankasi|
|Type||Fixed rate resettable sustainability Tier 2 certificates|
|Purpose of issuance||To finance and/or refinance eligible green and/or social projects|
|Maturity date||September 2031|
|Periodic distribution dates||Every 16th June and 16th December commencing on the 16th December 2021|
|Joint bookrunners||Bank ABC; Citi; Dubai Islamic Bank; Emirates NBD Capital; KFH Capital; HSBC|
|Legal advisor||Akin Gump Strauss Hauer & Feld|
|Listing||Irish Stock Exchange|
|Governing law||Turkish law|
|Rating||Final long-term rating of ‘B’/‘RR5’ by Fitch Ratings|