Clifford Chance

Clifford Chance advises on Kuveyt Türk's first issuance of Basel III compliant Tier 2 sukuk

Clifford Chance, together with its associate firm, Yegin Çiftçi Attorney Partnership Istanbul, recently advised the joint lead managers on Kuveyt Türk's US$350 million subordinated Tier 2 certificates issuance listed on the Irish Stock Exchange. Kuveyt Türk is a Turkish participation bank with a credit rating of BBB by Fitch and is majority owned by Kuwait Finance House, a Kuwaiti-based financial institution. The deal marks the first issuance by Kuveyt Türk of Basel III compliant Tier 2 sukuk.

The joint lead managers were Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, HSBC, KAMCO Investment Company, KFH Capital, Noor Bank and QInvest LLC.

The issuer of the certificates is an orphan special purpose vehicle company established by Kuveyt Türk in the Cayman Islands with the sole purpose of issuing the certificates. The certificates were issued with a face value of US$350 million with a fixed profit rate which is resettable after five years at the option of Kuveyt Türk. The certificates utilise a wakala structure, with the wakala assets comprising certain Ijara assets, Murabaha receivables and tangible investment sukuk.

Mr. R. Ahmet Albayrak, Kuveyt Türk’s EVP for Treasury, International & Investment Banking commented: "The transaction represents a major milestone for Kuveyt Türk; we are very pleased with the outcome and appreciative of the support provided by all contributors to its success”.

Stuart Ure, partner at Clifford Chance commented: "We were delighted to have advised the joint lead managers and to have supported on this transaction which represents the first capital raising by Kuveyt Türk of Tier 2 sukuk under the BRSA's Basel III framework. The transaction is testament to all the efforts of the parties involved and further demonstrates the practice's strength in respect of regulatory capital transactions."

The Clifford Chance team advising the joint lead managers in Dubai was led by partners Stuart Ure and Qudeer Latif, supported by associates Mark Dickinson, Eileen Kerr, Moussa Louizi and Julian Walley. Partner Mete Yegin led the Yegin Çiftçi Attorney Partnership team based in Istanbul and was supported by associates Sait Eryilmaz and Aras Görkem.