143
Table 4.21: Turkey's Public Sector Sukuk Issuances
2012 2013 2014 2015 2016 Oct-2017
Number of sukuk issuances in the local
market
1 2 2 2 5 8
Issuances in local market (million TL) 1.624 3.333 3.173 3.390 6.262 4.462
Number of sukuk issuances in
international market
1 1 1 - 1 1
Issuances in international market
(million USD)
1.500 1.250 1.000 - 1.000 1.250
Share of sukuk issuances in total
annual borrowing
3.7% 3.8% 3.7% 3.5% 8.5% 5.5%
Share of sukuk issuances in total debt
stock *
0.8% 1.8% 2.3% 2.6% 2.7% 3.1%
Source: Undersecretariat of Treasury
Domestic Market – Private Sector Issuance
The domestic corporate bond market in Turkey only picked up when the Banking Regulation
and Supervision Agency (BRSA) issued guidelines relating to the issuance of TL bonds by
Turkish banks in October 2010. Following the introduction of sukuk guidelines that same year,
there was a spike in sukuk issuance by participation banks. As at end-2016, sukuk made up
approximately 3% (or USD865.3 million) of the private sector’s bond issuance (refer to Chart
4.48).
Chart 4.48: Turkish Private Sector’s Conventional vs Sukuk Issuance
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 June 2017
USD billion
Sukuk issuance Conventional issuance
USD350
million
USD973.9
million
USD865.3
million
Sources: CMB, Bloomberg, Eikon-Thomson Reuters
In light of participation banks’ large appetite for Shariah-compliant investments to support
liquidity management, the government and the regulators should encourage SOEs and blue-
chip companies to issue sukuk. East Asian countries (Malaysia and Thailand) have used tax
incentives to make it attractive for the corporate sector to issue bonds in their local markets.
Similarly, the Turkish authorities have―over the last decade―taken regulatory and fiscal
initiatives to build the necessary ecosystem for a corporate (e.g. utilities-backed companies)
bond market to thrive in (as highlighted in Figure 4.14). Nonetheless, additional tax waivers
(e.g. removal of withholding tax on investments in debt securities) and the relaxation of rules
to allow FCY issuance in domestic markets may facilitate the build-up of a sukuk pipeline.