With huge currency and stock market volatility and the waning fortunes of president Recep Tayyip Erdogan, Turkey’s bond market was a spectacularly inhospitable place for sukuk deals last year.
Despite this, the Turkish government and HSBC succeeded in bringing a $3 billion five-year sovereign sukuk transaction in February 2022; the largest-ever international deal from a non-Gulf Cooperation Council issuer.
It was Turkey’s biggest single-tranche issue in any currency or format, generating an order book of over $10.75 billion, reflecting amid strong demand from Islamic and international investors. The deal was a shot in the arm both for Turkey’s access to global markets and for the Islamic finance sector.
The transaction was also a huge relief for Erdogan’s embattled administration. It was Turkey’s first foray into global markets in a year of extreme volatility. The proceeds represent great progress in achieving Ankara’s annual $11 billion external funding target.
The issuer took a big gamble on tapping markets in chaos.