UPDATE 1-Turkey set to launch sukuk push with 2012 sale

(Adds quotes, details)

ANKARA, April 17 (Reuters) - The Turkish government will

press ahead with its first issue of Islamic bonds this year and

the planned sale should encourage private companies to do

likewise and boost Istanbul's role as a financial centre, Deputy

Prime Minister Ali Babacan said on Tuesday.

The government had said previously it could issue a sukuk in

2012, overcoming sensitivities about Islamic finance in the

secular republic as it seeks to tap a rich pool of investors

flush with oil money.

Finance Minister Mehmet Simsek told the press conference

with Babacan on Tuesday that the government would also ease

taxes on sukuk issues to encourage investment.

"Turkey should participate in the sukuk issue market, and

the Treasury's sukuk issues will pave the way for those of the

private sector," Babacan said.

"Strengthening the sukuk market is also important in making

Istanbul a global finance center, and the sukuk certificates

will be traded on the Istanbul Stock Exchange," he added.

Plans for a sovereign sukuk issue from an economy regarded

as one of the most progressive and successful in the Muslim

world signals intent on Turkey's part to play a bigger role in

Islamic finance.

The size of the global sukuk market is estimated at more

than $100 billion.

Simsek told the news conference his ministry was working on

easing taxes on the Treasury's sukuk issue to make the bond more

attractive for possible investors, as he said it already does

with eurobond issues.

The two ministers did not elaborate on the size of the

planned sukuk issue, but both reiterated that it will be held

this year.

"Market conditions will determine the amount of the issue,

and the sukuk may be lira-, dollar- or euro-denominated and will

attract investors from both Turkey and abroad," Babacan said.

(Reporting by Ozge Ozbilgin, Writing by Ece Toksabay editing by

Patrick Graham)

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