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Deputy Prime Minister Ali Babacan reiterated on April 17 that Turkey is planning to issue Islamic bonds this year, as the country continues to seek to tap Islamic financing and support Istanbul's bid to become an international financial centre.

Turkey has previously said it plans a sukuk sovereign, but offered no detail. Whilst failing to elaborate on the size of the issue, Babacan said that the government will finally join in the fast-growing sukuk market at some point in 2012. "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, according to Reuters.

The deputy PM added that the sovereign issue is also intended to encourage Turkish companies to launch a bid to attract funding from Muslim investors, many of them cash rich thanks to booming oil prices. "The Treasury's sukuk issues will pave the way for those of the private sector," he said.

The announcement of the issue, alongside that of changes in tax regulation made during the same press conference, is the latest in the Turkish government's efforts to try to promote the use of sharia-compliant financial tools.

"We find [developing the sukuk market] important in terms of the diversification of financial sources and investment options for both national and international investors. We have completed regulations on rent certificate issuance," Babacan told reporters.

He also insisted that that deepening the sukuk market is important for Istanbul's bid to become an international financial center. "We think it will not be only a national market, but a regional and global market. These certificates will be traded on the Istanbul Stock Exchange everyday," he claimed.

Sitting beside Babacan, Finance Minister Mehmet Simsek told the press that the government is also to ease taxes on sukuk issues in a bid to attract a wider range of investors. The regulation would lift obstacles hindering international funds operating in Turkey, Simsek said, adding that only the domestic revenues of these funds will be subject to taxation.

In an illustration of the growing role of Islamic finance in Turkey, it was announced the same day that Asya Katilim Bankasi has secured a $325m dual-currency syndicated Islamic loan.