Gülbin Uzuner Bekit, Finance Coordinator of Akfen Holding, shared her opinions regarding infrastructure financing, which concerns companies closely, with Strategy Magazine. Bonds and bills, referred to as fixed and variable income securities, are bilateral debt commitments for both the investor and the issuer. The investor receiving the securities, at the beginning of the term, and the issuer, at the end of the term, are obligated to pay the committed amount within the framework of laws and regulations to which the relevant securities are subject. In Turkey, the principles regarding the characteristics and issuance of bonds are regulated within the framework of Debt Instruments Communication based Capital Markets Board (SPK) Act and the whole process is under the inspection of SPK. Financial or commercial institutions and governments need financing for various reasons. To satisfy this need, fixed income securities allow the issuance of the debt to a wide base of investors. The investors may include commercial banks, investment funds and private funds. In the event that the issued debt conditions considered to be appropriate, various investors are registered as recipients in the securities issuance and, in this way, the issuer is allocated with a debt. The issuer is obligated to pay the principal to the investor at the end of the term and make the coupon payments throughout the term. Banks and companies can issue bonds to meet their investment expenditures, refinancing of current debt or increase their capital. Apart from these, companies can contract debt through issuance for merger and acquisition (M&A) procedures as well. Governments, states and various autonomous government can issue bonds for current deficit financing, financing public institutions (companies, banks) and financial and non-financial institutions to restructure current debts. In the event that the debt issued via bills and bonds goes into default or the issuer declares bankruptcy, payees has the right and priority to demand and collect their debts from capital partners. In the event that the issuer goes into default without the presence of bankruptcy, the principal and interest of the debt can be collected by way of applying to judicial remedy. Payees can be categorized, among themselves, as primary payees and payees who can demand acquisition in the event that the rights of primary payees are fulfilled. In the case of bankruptcy of the debtor, capital partners, i.e. shareholders, are serviced last in the process of debt collection. Bond and bill issuer is obligated to make coupon payments at a contractually predetermined frequency (annually, semiannually or periodically) and pay the principal at the end of the term. There may be restrictive financial conditions concerning the issuer specific to the issued securities, these restrictions may affect new investments or debt ceiling. In the case of bankruptcy, the investment is paid to the securities investor before it is due. Fixed income securities supplied to the market by various issuer groups are classified as reduced or option bonds according to the issuer, coupon rate, term, amount, currency, applicable market/ regulation, call option and issuance below or above the principal. Bonds perform the interest service through the coupon payment. Fixed rate bonds effect payments according to the coupon rate determined during the issuance throughout the term, and this does not change during the securities term. The coupon rate of variable rate bonds is first announced during issuance, and later, they are determined and announced one day before each coupon payment date and the coupon amount is calculated according to this rate. Apart from fixed and variable rate bonds, there are bonds that are fixed in issuance, but whose rates are gradually increasing, depending on specific financial situation (e.g credit scoring or financial ratios). Fixed income securities with a term less than a year is referred to as bill and fixed income securities with a term longer than a year is referred to as bond. Short, medium and long term securities are generally, and respectively, considered as 1-3 years, 5-7 years and more than 10 years. While the most active bonds in the market are government bonds with 10-year and 2-year terms, the most active private sector bond is 3-year term Akfen Holding bond. While short term bonds can be generally seen in the issuance of treasuries, medium term bonds can be encountered as government and private sector bonds and long term bonds, again, as government bonds. Bonds, which are unsecured debt instruments, prove to be more advantageous in comparison with incurring debt via banks due to the low interest rates. Debt capability through issuance ensures interest advantage in parallel to the financial health and the investor’s confidence in the company’s operations as well as the procurement of a high amount of funds. Companies contracting debts in this way will be preserving their bank limits. The bonds are also preferred because of the fact that they are unsecured debt instruments. Akfen Holding pioneered by issuing one of the private sector bond having a nominal value of 100 million TL in 2010 , and afterwards, in 2011, 2012 and 2014, bond issuances were performed, respectively, amounting to 80 million TL, 140 and 200 million TL, and 140 and 200 million TL. Bonds of 140 and 200 million TL, currently being traded on the market and issued at the beginning of this year, have the characteristics of being the first 3-year term private sector bonds in Turkey. In the coming years, we plan to maintain bonds in our debt portfolio and also include “sukuk” which has an emerging market. Bonds, as financial instruments, can be structurally divided within themselves and also, qualitatively, offer structural alternatives. Sukuk is a financing instrument defined as “certificates of equal value representing common ownership over an asset or assets in an asset basket forming a basis” by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The key element distinguishing Sukuk from conventional bonds is the fact that the investor has a direct propriety right on an asset or an asset basket that constitutes a basis for sukuk. Conventional bonds, on the other hand, represent merely a financial debt of the issuer. As a type of bond becoming popular in both Turkey and around the world especially in recent years, Sukuk creates new resources for both issuers and investors. The recent state of the European and American economies had a negative effect on the amount of western-based foreign investment flowing into developing countries. Additionally, the need for Middle Eastern countries to turn the income acquired through rich natural resources into investments is increasing day by day. Conventional bonds are not preferred by Middle Eastern investors on the grounds that they are interest based debt securities. Sukuk, on the other hand, essentially distributes the income of real transactions based on allocation or leasing of assets, this investment instrument which doesn’t have the concept of interest, is preferred by both Islamic and conventional investors. Sukuk is a form of Asset Backed Securities (ABS) mentioned in SPK legislation, since 1992 in our country. In the legislation, the types that can be subject to ABS issuance are identified as Consumer Loans, Housing Loans, Debts Incurred By Financial Leasing Contracts and Debts Incurred by Export Transactions. Main types of Sukuk are Ownership, Management Agreement, Purchase & Sales, Partnership and Work Contract based Sukuks. ABS, which have been in the system since 1992, didn’t attract much attention until Sukuk’s integration to the system. Sukuk issuance was first performed in Malaysia in 2000 and today Malaysia and Saudi Arabia are the leading countries in the Sukuk market. Sukuk issuance was first performed in Turkey by the Treasury in September 2010, and in the subsequent years participation banks issued their own sukuks. While the sukuk market has a volume above 300 billion dollars in the world, the volume in Turkey is around 250 million dollars. Although it is a publicly dominated market both in our country and the world, it is an important and promising instrument in terms of creating new financial resources for the private sector.