KFH Capital Arranges the issuance of Sustainability Sukuk for KFH-Turkey

Al-Marzouq: The first tier 2 sukuk issuance of its kind for an Islamic financial institution globally Sustainability sukuk are used to finance green and social projects

Chief Executive Officer at KFH Capital, the investment arm of Kuwait Finance House Group, Abdulaziz Al-Marzouq, said that the company has succeeded in arranging a Tier2 sustainability sukuk issuance transaction of for KFH-Turkey amounting USD 350 Million. The sustainability sukuk issuance is considered as the first of its kind to be issued by an Islamic financial institution and the first tier 2 sustainability sukuk issuance transaction globally. Proceeds will be used to finance sustainability projects of green / social projects according to sustainable finance framework.

Al-Marzouq emphasized, in a press release, that KFH Capital has played the role of the global coordinator, a bookrunner, and one of the lead managers of the issuance transaction which has witnessed great demand by more than 180 regional and international investors. The issuance was oversubscribed by 12 times with an order book of USD$ 4 Billion. Sukuk were issued at a profit rate of 6.125% per annum and listed on the Irish Stock Exchange.

He noted that the issuance term is 10 years and 3 months from the date of issuance with an option to retrieve the sukuk after the lapse of 5 years from the date of issuance. The issuance achieved a landmark coverage in a record time, thus attracting regional and global investors and highlighting the significance of the sharia compliant product which provides finance to support growth and expansion projects of companies, governments, and mega development projects. He indicated that KFH Capital was keen on achieving a parallel, diversified, and comprehensive issuance of the sukuk to enhance trust and cooperation among investors and ensure the maximum and largest demand on the sukuk product.

The transaction is considered as a new addition to the record of KFH Turkey in the sukuk market and a continuation of its former successful issuances which have contributed largely to the bank growth and reflected its ability to attract funds from global markets. Also, it has signified trust in the bank’s strong position and its expansion plans.

KFH Turkey takes the credit for issuing the first international sukuk for a Turkish institution in 2010 and opening the door for Turkish banks and institutions to issue sukuks. This issuance was followed by several US$ issuances e.g., issuance of tier1 & tier 2 capital in addition to the issuance in RM in 2015 represented in the establishment of a RM 2 Million Sukuk program. These issuances have contributed to the strengthening of KFH Turkey position in the global sukuk market and attracting the attention of major investors worldwide.

Also, the issuance has enhanced the major leading role which KFH Capital plays in capital and sukuk markets and reiterated the trust which issuers have placed in the company and its expertise, efficiencies, and capabilities. KFH Capital has achieved positive results for its corporate and government customers worldwide and enhanced KFH Group leading role in the management and arrangement of sukuk issuances.