Clifford Chance

Clifford Chance advises on the first Basel III compliant Tier 2 sukuk issuance out of Turkey by Albaraka Türk Katılım Bankası Anonim Şirketi

The Clifford Chance Dubai and Istanbul offices recently advised the joint lead managers on Albaraka Türk's US$250 million subordinated Tier 2 trust certificates issuance listed on the Irish Stock Exchange. The issuance marks the first Basel III compliant Tier 2 sukuk issuance out of Turkey.

Albaraka Türk is a Turkish participation bank with a credit rating of BB by S&P and is owned by the Bahrain-headquartered Albaraka Banking Group. Albaraka Türk previously accessed the sukuk market in 2013 (US$200 million ten year subordinated Tier 2 certificates) and in 2014 (US$350 million five year senior certificates).

The joint lead managers included Barwa Bank, Dubai Islamic Bank, Emirates NBD Capital, Nomura International, Noor Bank, QInvest and Standard Chartered Bank.

The issuer of the certificates is an orphan special purpose vehicle company established by Albaraka Türk in the Cayman Islands with the sole purpose of issuing the certificates. The certificates were issued with a face value of US$250 million with a fixed profit rate which is resettable after five years at the option of Albaraka Türk. The certificates utilise a combination of a commodity murabaha and wakala structure, with the wakala assets comprising certain lease assets held and leased by Albaraka Türk and certain Shari'a compliant sukuk or trust certificates fully backed by, or based on, underlying tangible assets.

Stuart Ure, Capital Markets Partner at Clifford Chance Dubai commented: "This landmark transaction represents the first Tier 2 sukuk approved under the BRSA's Basel III framework and is testament to all the efforts of the parties involved. Once more, we were delighted to support Albaraka Türk."

The Clifford Chance team advising the joint lead managers in Dubai was led by partner Stuart Ure, supported by associates Mark Dickinson and Eileen Kerr. Partner Mete Yegin led the team based in Istanbul and was supported by associates Sait Eryilmaz and Aras Görkem.