CAPITAL MARKETS - Erdogan Faces Worse Deal in Sukuk Than Dollar Debt Market: Turkey Credit

www.bloomberg.com - Turkey, planning its first sale of bonds that comply with Islamic law, may have to pay about a percentage point more in interest than on bonds sold in dollars that don’t have religious restrictions.

Turkey, the second-biggest Muslim economy after Indonesia, will probably have to pay a minimum of 5.5 percent annually on five-year debt to be attractive, according to Samer Mardini, vice president of fixed-income and Islamic finance products at SJS Markets Ltd. in Dubai. That’s 120 basis points higher than similar maturity dollar debt, data compiled by Bloomberg show.  (source)

RATINGS - PRESS RELEASE: Fitch Assigns Kuveyt Turk's Sukuk Issue Final 'BBB-' Rating

www.strateji.com.tr - Fitch Ratings has today assigned Kuveyt Turk Katilim Bankasi A.S.'s (Kuveyt Turk) five-year USD350m Sukuk issue a final rating of 'BBB-'. The rating reflects the completion of the issuance and receipt of documents conforming to the information previously received by Fitch.  (source)

RATINGS - S&P Revises Albaraka Turk Outlook To Negative

The following is a press release from Standard & Poor's:

-- Turkish bank Albaraka Turk continued to rapidly grow its loan book for the third consecutive year.
-- New loans to the risky construction sector are the main source of growth and have caused the bank's already weak capitalization to deteriorate, in our opinion.
-- We are revising our outlook to negative from stable and affirming the 'BB/B' long- and short-term ratings on Albaraka Turk.
-- The negative outlook reflects the possibility that we could downgrade the bank during the coming year, because of our negative view of its lending strategy and the subsequent pressure on its capital and future asset quality. (source)

BANKING - RATINGS - Yatirim Finansman Places Bank Asya Ratings Under Review, Possible Downgrade

Bank Asya reported TL 48.0mn net profit in 1Q11 (down by 32% q/q and down by 19% y/y). The results were head and shoulders below the market consensus estimate of TL 72mn and our estimate of TL 69mn. While quarterly RoE came at single digit level of 9.8%-lowest ever-, the trailing RoE continues its journey towards south with 13.3% (down by ~600bp y/y).

Deserves a recommendation downgrade, but we will wait for todays conference call. Bank Asyas 1Q11 can be described with muted growth both in loans and deposits, severe pressure on NIM and signals for asset quality deterioration. We are now biased for a recommendation downgrade for Bank Asya shares (from MP to UP) due to our key take away from 1Q11 results and the overall outlook of the bank. We will release a note following todays conference call. (full story)

RATINGS - Ekspres Invest Places Albaraka Turk Under Review

Albaraka Turk's TL43mn net income is in-line with house and consensus estimate of TL41mn. On the back of 15%  loan growth the bank achieved in 4Q10, we expected the net interest income to go over TL90mn vs. the TL84mn  actual result. Commissions were better than expected and other operational income was also stronger than the previous quarters. Albaraka Turk's 16% QoQ NPL growth was also very high compared to the bank's own standards. (source)

FINANCIAL MARKETS - EFG Securities Keeps Bank Asya At Hold

50bp NIM erosion projected for 2011 -- The main highlight of the call was management's 50bp NIM erosion guidance for 2011. Recall that Bank Asya successfully increased its NIM by 55bp qoq to 5.2% in 4Q10. However, management said that the NIM contraction guidance was with respect to the FY10 average (4.8%) and not the YE10 level. (source)