(The following statement was released by the rating agency)
Feb 07 - Fitch Ratings has assigned Hazine Mustesarligi
Varlik Kiralama Anonim Sirketi's (Hazine) USD1.5bn of global certificates
(Sukuk), due 26 March 2018, a 'BBB-' rating. The certificates have a profit rate
Hazine, an asset leasing company incorporated solely for the purpose of
participating in this transaction, is wholly owned by the Republic of Turkey,
acting through the Undersecretariat of the Treasury.
The rating reflects Fitch's judgement that the Sukuk can be considered an
unconditional, unsubordinated and general obligation of the Republic of Turkey,
ranking equally with Turkey's other senior unsecured obligations. The rating is
therefore in line with Turkey's Long-term foreign currency Issuer Default Rating
(IDR) of 'BBB-' on which the Outlook is Stable.
The Sukuk follows an ijara' (leasing) structure. The issuer has purchased
publicly-owned real estate from the Republic of Turkey using the proceeds from
the Sukuk. These assets have been leased back to the Republic for a period equal
to the tenor of the Sukuk; in return the Republic makes semi-annual rental
payments to the issuer at least equal to periodic distribution amounts made by
the issuer to the Sukuk investors.
The transaction documents incorporate a purchase undertaking requiring the
Republic to repurchase the assets on maturity (or earlier, in the event of
dissolution/default), together with any outstanding distribution. Certificates
are unsecured and certificate holders have no direct recourse to the lease
While certain transaction documents relating to this issue, being governed by
English law, may not be enforceable under applicable law, including Turkish law,
Fitch's rating for the certificates reflects the agency's belief that the
Republic of Turkey would stand behind its obligations under the transaction
By assigning a rating to the certificates, Fitch does not express an opinion on
the Sukuk structure's compliance with Sharia principles.
Fitch upgraded Republic of Turkey's sovereign ratings to 'BBB-', the bottom rung
of investment grade, on 5 November 2012 (see 'Fitch Upgrades Turkey to
Investment Grade' at www.fitchratings.com).