The private sector turned to alternative financing instruments under the new economic management and tightening financing conditions.
Tightening financing conditions accelerated the issuance of lease certificates as well as bonds in the private sector.
The private sector turned to alternative financing sources as the search for higher yields at home and abroad combined with the increased financing needs of companies. While monetary tightening, especially with the new economic administration, led to an increase in bond issuances by the private sector, the weekly bulletins of the Capital Markets Board revealed a parallel situation in lease certificate issuances.
While lira-denominated bond issuances exceeded TRY 604 billion, the increase in lease certificate issuances after June stand out,too. In the first 10 months of the year, TRY 179.2 billion of lease certificate issuance approvals were obtained.
Until the end of October this year, 271 companies received permission to issue 604 billion 26 million 900 thousand liras, 40 billion 516 million 95 thousand dollars and 1 billion 250 million Euros worth of bonds. Likewise, 57 companies won the approval for the issuance of 179 billion 165 million 500 thousand liras and 550 million dollars in the first 10 months of the year for lease certificates.
A great deal of these bonds and lease certificates were issued in June-October period. The value of bonds and lease certificates issued in October only are three times higher than in January.
DEMAND FOR SUKUK ISSUANCE GROWS IN TURKEY
Kaan Kızıroğlu, Chairman of the Board of Directors of Servo Capital, stated that sukuk issuances, in addition to bonds and bills, appeal to different investor groups and said: “There are also participation banks and financial institutions that fund themselves through sukuk issuances. The number of fund managers buying the papers of participation banks issuing sukuk is also increasing in the world. It has become an increasing trend in the world. Sukuk issuances to the Gulf Region also stand out in the borrowing of Turkish companies from abroad. Sukuk issuances in Turkey are increasing in line with the general trend in the world.” Emphasizing that there is a growth in demand for sukuk issuances in Turkey, Kızıroğlu said, “In fact, it does not look like a debt instrument. The sukuk issuer bases the sukuk issuance on an asset, and that asset is invested in with the issuer. And the investor receives the return from that asset at the end of the term. It is interest-free and therefore offered to fund managers who need interest-free instruments. Issuers and participation banks that want to fund themselves in an interest-free manner benefit from these issuances.”