ANKARA
The Islamic Development Bank’s six sukuk worth over $6 billion began trading at the Borsa Istanbul Friday.
The bank's sukuk were of various maturity dates until Sept. 2019.
Sukuk is a financial certificate, like a bond, which complies with Islamic religious law by avoiding interest payments.
This was the first time that the Borsa Istanbul, Turkey’s main stock exchange, introduced the sukuk of an international financial institution for trading on its Debt Securities Market Outright Purchases and Sales Market, among qualified investors.
Capital Markets Board Chairman Vahdettin Ertas, Borsa Istanbul Chairman Ibrahim Turhan, and Islamic Development Bank head Ahmed Muhammed Ali el-Medeni rang the exchange’s bell Friday to introduce the sukuk in Istanbul.
Ertas said the introduction of the sukuk was a historic move that would contribute to making Istanbul an international financial center.
“Turkey has its own high potentials, its own unique characteristics and the necessary regional advantages to become a regional center of interest-free finance products. The sukuk will be traded on one of the best markets thanks to Istanbul’s intercontinental position; Turkey’s young, dynamic and Muslim population; and the Turkish government’s support,” he said.
"Introducing the sukuk in Borsa Istanbul will increase the bank’s liquidity, and, more importantly, give a positive message to markets about Turkey’s role in international finance," El-Medeni said.
The Islamic Development Bank has its headquarters in Jeddah and was founded by members of the Organization of Islamic Cooperation.
Turkey is among the shareholders of the Islamic Development Bank with 6.5 percent shares. The bank’s sukuk are rated AAA and Aaa by international credit rating agencies. It is currently traded in London, Malaysia and NASDAQ Dubai stock exchanges.
According to experts, Turkey is a gateway to Middle Eastern and Central Asian regions. The country's economic heart, Istanbul, has also its own unique characteristics, given its geographic region and location.
Eighteen sukuk bonds worth $7.2 billion have been issued in Turkey since 2010.
Islamic financial institutions have grown nine-fold to $1.8 trillion in the last ten years.
Interest is prohibited in Islamic law, which encourages its own Islamic finance system.
The Islamic finance industry's assets are projected to amount to $6.5 trillion by 2020.
Islamic finance institutions generally escaped the worst effects of the recent financial crisis, when the world’s largest economy, the U.S. and EU, collapsed. This is because the institutions were said to have not been exposed to subprime mortgages and toxic assets that were partially responsible for bringing down the U.S. economy into recession.
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