Diversification of Islamic Financial Instruments
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Table 52: Sukuk Issuances in Turkey by Contract Structure
Tenor (Years) Issue Size Issuer Name Year
Structure 5 US$500m Turkye Finans ALC 2014
Mudaraba 5 US$350m Bereket ALC 2014
Wakala / Murabaha 10 US$1bn Treasury ALC 2014
Ijra 728 days TRY1.8bn Treasury ALC 2015
Ijra 2 TRY1.6bn Treasury ALC 2015
Ijra 10 US$250m Albaraka Sukuk Ltd. 2015
Murhabaha 10 US$350m KT Sukuk Co. Ltd. 2016
Wakala 729 days TRY10m Kuveyt Turk ALC 2016
Wakala 179 days TRY300m Kuveyt Turk ALC 2016
Ijra 5 US$1bn Treasury ALC 2016
Source: Capital Market Board (CMB, 2016)
Participation funds are an important vehicle, besides Sukuk, for the investors who prefer
avoiding interest-based transactions. Under the legal provisions of these funds, a participation
fund is defined when at least 80% of the net asset value of the fund is invested in lease
certificates, participation accounts at PBs, corporate shares, gold and other precious metals
and other non-interest bearing capital markets instruments approved by CMB (Under-
Secretariat of Treasury, 2016).
There are 29 such participation funds available in Turkey and net total value of these funds
was USD 75 million in June 2016 (UnderSecretariat of Treasury, 2016).
Summary of Islamic Capital Markets in Turkey
 The Sukuk issuance is likely to grow with further development of PBs in future.
However, due to regulatory limitations, PBs have been able to issue Sukuk based on
leasing-receivables (51%) and Murabahah-based Sukuk (41%) only. The future
prospects of Sukuk based on infra-structure projects is encouraging for the long-term
growth of Islamic Finance in the country (IFN 2016)
 The most common types of Sukuk in Turkey are Ijarah Sukuk. One of the reasons of
the dominance of lease certificates is because until 2013 the Capital Market Board only
allowed the special-purpose vehicle (SPV) to issue these certificates. However, in 2013
CMB has permitted, in addition to lease certificates, other types of certificates
including Mudarabah, Murabahah, Musharakah and Istisna. The Legislation passed by
the Parliament in 2012 has paved the way for the establishment of Public Asset-
Leasing Companies . By the end of 2014, US$3.75 billion, worth of Sovereign-Sukuk
(Dollar denominated) have been issued.
3.5.5 TAKAFUL (ISLAMIC INSURANCE) IN TURKEY
In Turkey, the regulatory agency of insurance is the Undersecretariat of Treasury. Takaful
Companies are not allowed to operate both life and non-life insurance divisions at the same
time. Foreign insurance companies can also operate by first opening its branch. On the other
hand, insurance companies owned by foreign capital have to be established as a joint stock or a