Al-Nahedh: Another Milestone for KFH’s Instrumental Role in Sukuk Market

-          Total Demand Exceeded USD 1.9 Billion

Kuwait Finance House Turkey (KFH-Turkey) has issued a five-year Sukuk worth USD 500 million. The Sukuk issuance has been priced Yielding 5.136%. It has been rated BBB by Fitch Rating Agency which reflects the robust financial position of the bank. The Sukuk will be listed on the Irish Stock Exchange.

“This issue is another milestone for KFH’s instrumental role in the Sukuk market. It is a continuation of the series of KFH-Turkey’s successful issuances that contributed in the growth of the bank, yet reflected its ability to attract international investors. This reiterates the bank’s strong financial position and healthy expansion plans,” said KFH-Group CEO Mazin Al-Nahedh.

“KFH-Turkey mandated KFH-Capital as a global coordinator to arrange the issue in collaboration with regional and global banks. KFH-Capital played a key role in the successful issuance. Despite market volatility, KFH-Capital managed to coordinate with banks and investors to achieve an optimal pricing for the Sukuk, which met both the investors and the issuer’s expectation, and raised the amount needed from the international markets in a record time,” added Al-Nahedh.

He further noted that the initial price thoughts (IPT) of the issuance was set at low 400 bps over the 5 year Mid-Swap. After the IPT’s were released the issuance drew great interest from international investors, garnering orders from around 120 accounts. The total demand rose over 3.8-fold to exceed USD 1.9 billion. The issue was finally priced at 385 bps over 5 year Mid Swap due to strong demand and the strong order book assisted in achieving the best price in comparison to other recent Turkish banks bond issuance.

It is worth noting that KFH-Turkey paved the way for the Sukuk market in Turkey when it issued debut sovereign Sukuk for a Turkish institution in 2010, followed by the second and third issues in 2011 and 2014. After the consecutive achievements, KFH-Turkey issued Sukuk worth 300 million Ringgit with tenure of 5 years as part of a 2 billion Ringgit Sukuk program in Malaysia in 2015.

Moreover, in September 2016 KFH-Capital successfully acted as Joint lead manager & bookrunner for the USD 500 million issuance of Sharjah Islamic Bank garnering orders around USD 1.6bn, oversubscribed more than 3 times. The Sukuk carried a maturity of five years and Sukuk was priced to yield 3.084 per cent.

Also, KFH-Capital led KFH-Turkey Tier 2 Basel III compliant capital-boosting Sukuk issue worth USD 350 million in February 2016 to strengthen the bank’s capital adequacy ratio. The Sukuk was set to yield 7.9 percent for 10NC5 Sukuk. In April 2016, KFH-Capital acted as Joint Lead Manager and bookrunner in USD 250m Basel III Compliant Boubyan Bank Tier II 10NC5 Sukuk.