OREANDA-NEWS. Fitch Ratings has assigned Hazine Mustesarligi Varlik Kiralama Anonim Sirketi's (Hazine) USD1bn of global certificates (Sukuk), due June 2021, a 'BBB-' rating. The certificates have a profit rate of 4.251%. The rating is in line with The Republic of Turkey's (Turkey) Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BBB-', which has a Stable Outlook.

KEY RATING DRIVERS

The sukuk rating is driven solely by Turkey's IDR and senior unsecured rating of 'BBB-', due to the sukuk's structure and documentation, which include the following features:

-On the scheduled dissolution or following the occurrence of a dissolution event, Hazine will have the right under the purchase undertaking to require Turkey to purchase and accept the transfer and conveyance of all of its interests, rights, benefits and entitlements in and to the lease assets. The exercise price payable by Turkey to the issuer for such purpose is intended to fund the dissolution distribution amount payable by the issuer under the certificates.

-Turkey will have to purchase the assets at a price equal to the outstanding face amount of the sukuk plus any accrued and unpaid periodic distribution amounts, and any accrued but unpaid supplementary services charge amount; and

-On or prior to each rental payment date, Turkey (as lessee) will pay to Hazine (as lessor) an amount reflecting the rental due in respect of the lease assets, which is intended to be sufficient to fund the periodic distribution amounts payable by the issuer under the certificates and is required to be applied by the issuer for that purpose.

-Turkey has represented and warranted in the purchase undertaking, among other things, that the payment obligations of the republic under the purchase undertaking, the lease agreement and the servicing agency agreement are and will be direct, unconditional, unsubordinated, unsecured and general obligations of Turkey at all times, which rank at least equally with all other unsecured and unsubordinated external indebtedness of Turkey.

The programme includes a negative pledge provision that is binding on Turkey, as well as financial reporting obligations, covenants and default acceleration terms.