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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006<br />
IS INVESTMENT<br />
Is Investment aims to become the foremost<br />
player in the capital markets–not only in<br />
Turkey but also in the region.<br />
Ilhami Koc<br />
General Manager<br />
Emerging markets continue to benefit from the<br />
search for higher returns in a low-yield<br />
environment. With unacceptably low interest<br />
rates in G7 countries, a large volume of<br />
liquidity has been propelled into emerging<br />
market assets through yield hungry hedge<br />
funds. The global appetite for carry trade is<br />
expected to remain strong in 2006, despite<br />
narrowing interest rate differentials vis-à-vis<br />
the US and the Euro zone.<br />
Improving economic fundamentals underpin<br />
the positive bias towards emerging markets.<br />
Emerging market economies have made<br />
substantial progress in remedying their deep<br />
rooted structural imbalances in recent years.<br />
In line with the implementation of correct<br />
economic policies, the vulnerability of<br />
emerging economies has eased considerably<br />
in terms of public debt as a proportion of GNP<br />
and their current account deficits.<br />
The Turkish economy started 2006 basking in<br />
the glow of an upbeat conjuncture, with an<br />
easing in worries over public debt dynamics,<br />
remarkable success in the privatization of bigticket<br />
state assets, a taming of the deeprooted<br />
inflationary expectations and the<br />
establishment of a sustainable and high<br />
growth environment. Success in implementing<br />
the medium-term IMF-endorsed economic<br />
program and the prospect of EU membership<br />
has provided a solid story in attracting ample<br />
foreign capital.<br />
As the foremost player in the Turkish capital<br />
market, Is Investment stands out as the best<br />
business partner both for portfolio investors<br />
and strategic investors. Is Investment was<br />
established in 1996 as a subsidiary of Is<br />
Bank, its main shareholder with a 92% share,<br />
which has always been a pioneer in the<br />
capital markets. Is Bank has accomplished<br />
many firsts in the establishment and<br />
development of the Turkish capital markets; it<br />
has the highest number of investors, manages<br />
the largest investor portfolios and has handled<br />
the majority of public offerings. Besides<br />
traditional brokerage activities, Is Investment<br />
has diversified into financial services, like<br />
corporate finance activities, investment<br />
advisory and international capital market<br />
activities.<br />
Is Investment’s Corporate Finance<br />
Department offers a wide range of services<br />
including initial and secondary public offerings<br />
of public and private companies, public<br />
offerings of various debt instruments,<br />
consultation services for mergers &<br />
acquisitions, private equity, venture capital<br />
projects and strategic planning and<br />
restructuring.<br />
Is Investment has a local investor base and an<br />
expanding global investor base, mostly in<br />
Europe, the United States, the Middle East<br />
and Central Asia, and is eager to broaden its<br />
services in line with the increasing global<br />
demand and liquidity.<br />
Is Investment aims to become the foremost<br />
player in the capital markets–not only in<br />
Turkey but also in the region–setting a<br />
benchmark which will be followed by other<br />
investment banks and brokerage houses,<br />
specifically in the Middle East and the<br />
Commonwealth of Independent States (CIS).<br />
We have all the means and tools to achieve<br />
our goal. The establishment of a rep-office in<br />
Kazakhstan and subsidiary in London are the<br />
first steps in our quest to reach this goal.<br />
Is Investment, with its experienced staff, is the<br />
only brokerage house in Turkey belonging to<br />
the International Securities Markets<br />
Association. Is Investment is Turkey’s premier<br />
investment bank in international capital<br />
markets, with the largest transaction volume in<br />
the primary and secondary markets. In the last<br />
two years (2004-2006), Is Investment has<br />
reached a volume of almost US$ 2 billion in<br />
the primary markets.<br />
Turkish Treasury issues accounted for more<br />
than US$ 1 billion of this amount, with other<br />
emerging market issues (primarily Russian<br />
and Kazakh credits) accounting for the other<br />
US$ 1 billion. Is Investment was also<br />
mandated as the co-manager in three of the<br />
Turkish Treasury’s Eurobond issuances (US$<br />
1.25 billion of 2014 maturity, 9.5% notes, US$<br />
2 billion in 2025 maturity 7.375% notes and<br />
US$ 1.5 billion in 2036 maturity, 6.875%<br />
notes). It was also mandated as a comanager<br />
in three corporate Eurobond issues,<br />
including Petrol Ofisi in Turkey (US$ 175<br />
million in 2009 maturity, 9.75% notes),<br />
Intergas Central Asian in Kazakhstan (US$<br />
250 million in 2011 maturity, 6.875% notes)<br />
and Finansbank Russia (US$ 250 million in<br />
2008 maturity 7.9% notes).<br />
In total, Is Investment took part in 27 issues in<br />
2004 and 54 issues in 2005, 14 of which were<br />
in Turkish credits and 67 in other Emerging<br />
Markets.<br />
Examples of these issues include Finansbank<br />
Russia, Vneshtorgbank, the Industry and<br />
Construction Bank of Russia, Gazprom,<br />
Sistema, Megafon, the Russian Standard<br />
Bank, Vimplecom and Alrosa in Russia; KKB,<br />
Halyk Bank, TengizChevron Oil, ATF Bank,<br />
Nur Bank and Center Credit in Kazakhstan;<br />
and Cosan, Gerdau, CNO in Brazil. In the<br />
secondary markets, Is Investment had a<br />
combined transaction volume of more than<br />
US$ 4.6 billion in both 2004 and 2005, of<br />
which about 90% of the transactions were in<br />
fixed income instruments with the rest in<br />
global equity markets. However, with greater<br />
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