Akin Gump advises Kuveyt Turk on the World’s First Regulatory Capital Tier 2 ESG Trust Certificates

Akin Gump has advised Kuveyt Türk Katilim Bankasi A.S., one of the leading Turkish participation banks majority-owned by Kuwait Finance House, on the landmark issuance of USD350 million of fixed-rate resettable sustainability Tier 2 certificates due 2031, listed on the Irish Stock Exchange plc (Euronext Dublin).

These trust certificates are the world’s first regulatory capital Tier 2 environmental, social and governance (“ESG”) and Islamic compliant trust certificates. An amount equal to the net proceeds will be applied to finance and/or refinance eligible green and/or social projects in accordance with Kuveyt Türk’s Sustainable Finance Framework.

The certificates were issued on September 16, 2021, through KT21 T2 Company Limited, a Cayman Islands incorporated special purpose vehicle. The joint bookrunners were Bank ABC, Citi, Dubai Islamic Bank, Emirates NBD Capital, KFH Capital and HSBC.

The issuance was oversubscribed by 12 times with an order book of USD4 billion. The issuance also achieved the tightest pricing for any Tier 2 Issuance out of Turkey since 2017 at 6.125 per cent, reflecting strong fundamentals and positive market sentiments.

Ufuk Uyan, the chief executive officer of Kuveyt Türk, commented, “We are honoured to be in the market with the first ever sustainable Tier 2 sukuk issuance globally. Our management philosophy is governed by sustainability which is also very much in line with principles of Islamic finance. We are very happy to be issuing a sukuk intended to preserve nature, not exhaust it.”

“This is a ground-breaking transaction which complies with multiple facets including ESG and sustainability; Basel III regulatory capital and principles of Islamic finance,” added Akin Gump partner Rizwan Kanji, who led the Akin Gump team. “We are delighted to have assisted Kuveyt Turk on yet another first of its kind issuance.”

In addition to Kanji, the Akin Gump debt capital markets and Islamic finance team advising Kuveyt Turk included counsel Hamed Afzal and associate Sahar Abas.