Turkiye’s Ziraat Katilim sells $500 million 3-year debut sukuk paper at 9.375% coupon

Ziraat Katilim Varlik Kiralama has sold $500mn of a debut sukuk paper (XS2699906512) due November 2026 at a coupon rate of 9.375% (priced at 99.996), the lender said on November 3.

Dubai Islamic Bank (Dubai/DIB), Emirates NBD Capital Limited, HSBC (London/HSBA) and Standard Chartered Bank (London/STAN) acted as intermediaries in the deal.

In October 2022, in the last sukuk sale by a Turkish issuer abroad, the Treasury sold $2.5bn of three-year papers at a coupon rate of 9.758% and a yield to investor of 9.75%.

Looking at the global markets, there is no turbulence of note impacting sentiment. The US Treasury yields, which were sailing through the 6%s across the curve, are currently taking a breather around the 5%-level.

The USD Index (DXY) fell into the 105s after pushing through the 107-level,still up from the 99s seen in July.

As a result, Turkiye’s five-year credit default swaps (CDS) have once again fallen below the 400-level in parallel with EM peers, while the yield on the Turkish government’s 10-year eurobonds has declined below the 9%-level.

The USD/TRY rate is, meanwhile, still heading north. On September 21, the pair once again broke through the horizontal barrier set at the 27.00-level. The latest record high, registered on November 3, is 28.5666.

The Turkish government’s ‘five/10 kurus (Turkish cents, pronounced as kurush) devaluation per day policy’ in the struggle to stop the slide is still in place. As of November 3, the latest daily trench was dug around the 28.40-level, up 3% m/m and 52% y/y.

Following the local elections to be held in March, Turkiye’s policy rate will reach its peak. The finance industry will then be welcomed in for the rate-cutting party.

Ziraat Katilim Varlik Kiralama has a B-/(EXP) rating from Fitch Ratings, one notch below Turkiye’s sovereign rating and six notches below investment grade in line with local banks.

The company, a 100%-owned unit of Ziraat Katilim Bank, is an asset leasing company. Islamic bonds are sold through such asset leasing companies.

Ziraat Katilim Bank, launched in 2014 by Turkiye’s government-run Ziraat Bank (the largest bank in the country), is an Islamic bank. Its total assets stood at Turkish lira (TRY) 307bn ($11bn) at end-June.

There are a total of eight active Islamic banks in Turkiye. Their combined assets stood at TRY 2 trillion at end-June, representing a 9% share in the Turkish banking industry.

In January, Ziraat Bank sold $500mn of eurobonds (XS2581381634) due August 2026 at a coupon rate of 9.50% and a yield to investor of 9.75% (priced at 99.273).

In October, government-run Turk Eximbank sold $500mn of eurobonds (XS2692231975) due January 2027 at a coupon rate of 9% and a yield to investor of 9.125% (priced at 99.586).

So far this year, Turkish issuers have sold a total of $13bn worth of eurobonds across 13 papers.

IssuerISINCouponVolume (USD mn)End of placementMaturityUST+CDS+
Ziraat Katilim (sukuk)XS26999065129.375%500Nov 6, 2023Nov 12, 2026476570
EximbankXS26922319759.00%500Oct 25, 2023Jan 28, 2027341496
We Soda (UK/Ciner)US92943TAA169.50%800Sep 28, 2023Oct 6, 2028488565
Arcelik (ARCLK)XS26950384018.50%400Sep 25, 2023Sep 25, 2028393467
TSKB (TSKB)XS26782327819.375%300Sep 19, 2023Oct 19, 2028487550
Yapi Kredi Bank (YKBNK)XS24453436899.25%500Sep 13, 2023Oct 16, 2028486550
Vakifbank (VAKBN)XS26775174979.00%750Sep 12, 2023Oct 10, 2028464527
Akbank (subordinated)XS2611752317/XS2611752663/XS26117472349.60%300Jul 25, 2023Jul 25, 2033(/28)574525
TreasuryUS900123DJ669.125%2,500Apr 13, 2023Jul 13, 2030597396
TreasuryUS90014TAJ079.375%2,250Mar 8, 2023Mar 14, 2029517393
Ziraat BankXS25813816349.50%500Jan 25, 2023Aug 1, 2026566410
EximbankXS23955764379.375%500Jan 24, 2023Jan 31, 2026552387
TreasuryUS900123DG289.375%2,750Jan 11, 2023Jan 19, 2033619427

In 2022, Turkish borrowers sold $12bn of eurobonds across eight tenders. The Treasury was the dominant player, raising $11bn in five tenders. It redeemed $8bn on four papers during the year.

In 2023, Turkish eurobond sellers are supposed to redeem a total of $11bn across 15 papers. In the year to date, $9bn across 13 papers has been redeemed.

On December 10, Isbank (ISCTR) is to redeem a $400mn paper (XS1003016018), which pays a 7.85% coupon.

Upcoming eurobond redemptions by major Turkish issuers
IssuerISINCouponVolume (mn)IssuanceMaturity
Isbank (ISCTR)XS10030160187.85%$400Dec 10, 2013Dec 10, 2023
TreasuryUS900123CR917.25%$2,000Oct 23, 2018Dec 23, 2023

Turkiye’s finance minister Mehmet Simsek has, meanwhile, been talking about selling bonds worth $8.5bn for earthquake recovery efforts and $3bn for export credits to the UAE. It is unknown what type of papers will be sold and when.

   Up to USDbnSoldType
Nov 2, 2023AktifbankSPK ApprovalTRY0.75papers abroad
Oct 27, 2023Pasha Yatirim BankasiSPK Approval0.025papers abroad
Oct 25, 2023Ziraat Katilim BankasiSPK Approval0.5Nov 6, 2023sukuk
Oct 5, 2023Destek Yatirim BankasiSPK Approval0.02papers abroad
Sep 28, 2023Mersin LimanSPK Approval0.6eurobond
Sep 28, 2023Kalibre BoruSPK Approval0.075papers abroad
Sep 27, 2023TAV (TAVHL)SPK Application0.75papers abroad
Sep 20, 2023Ford Otosan (FROTO)SPK Approval€0.5papers abroad
Sep 14, 2023EximbankSPK Approval3Oct 25, 2023eurobond
Sep 14, 2023Fiba Yenilenebilir Enerji HoldingSPK Approval0.2papers abroad
Sep 14, 2023Akbank (AKBNK)SPK Approval2papers abroad
Sep 14, 2023Akbank (AKBNK)SPK Approval2green
Sep 11, 2023QNB Finansbank (QNBFB)SPK Application4papers abroad
Sep 11, 2023QNB Finansbank (QNBFB)SPK Application1subordinated
Sep 7, 2023Isbank (ISCTR)SPK Approval2green
Aug 31, 2023VakifbankSPK Approval1Sep 19, 2023green
Aug 31, 2023Nurol HoldingSPK Approval0.5papers abroad
Aug 28, 2023QNB Finansbank (QNBFB)Board mandate0.3subordinated
Aug 24, 2023Garanti (GARAN)SPK Approval2green
Aug 9, 2023Destek Yatirim BankasiSPK Approval0.015papers abroad
Jul 27, 2023Isbank (ISCTR)SPK ApprovalGBP 0.02XS2658516732, Jul 29, 2024
Jul 20, 2023ArcelikSPK Approval0.5papers abroad
Jul 19, 2023Garanti (GARAN)GMTN Programme Renewal6papers abroad
Jun 20, 2023Garanti (GARAN)SPK Application2papers abroad
Jun 20, 2023Garanti (GARAN)SPK Application€0.75mortgage-backed
Jun 8, 2023QNB Finansbank (QNBFB)SPK Approval0.6papers abroad
Jun 8, 2023QNB Finansbank (QNBFB)SPK Approval0.1green
May 17, 2023Destek Finans FaktoringSPK Approval0.00875May 25, 2023papers abroad
May 11, 2023T.T.L. Tutun SanayiSPK Approval0.01papers abroad

Source: intellinews

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