CEE & Turkey
20 Mar 2017 CEE & Turkey
There are good reasons to be cautious around Turkey this year, given well-known concerns over security and domestic political stability exacerbated by polarisation as we head towards the scheduled referendum over the introduction of an Executive Presidency. Turkey’s well known Achilles heel, large external financing requirements (around US$200bn, double the country’s foreign exchange reserves), and associated concerns over rollover risks on around US$160bn in short-term debt liabilities, has not been helped by the recent sharp exchange rate drops or less-than-orthodox monetary policies from the CBRT, which are considered “opaque” by many.
Tofas Turk Otomobil Fabrikasi A.S. secured a €200mn ECA-back term loan facility against a backdrop of increasing emerging market volatility. The deal was critical for the development of the country’s automotive industry, and helped Tofas Turk finance the development of two new car models.
IC İçtaş Enerji Yatırım Holding A.Ş. was able to utilise its close relationship with banks to rapidly close one of Turkey’s largest project finance loans of the year. The size of the project and the acquisition of two new HEPPs from the privatisation authority also managed to attract a larger group of lenders to the transaction.
Crescent Capital was able to secure a unique project finance facility within the Turkish markets with a mezzanine facility structured as a Murabaha commodity purchase tranche, achieving a long tenor, an uncommon feature in this market, and structured as a true non-recourse facility.
İGA Havalimanı İşletmesi A.Ş set out to secure up to €4.5bn in a bid to build Turkey’s largest mega-project, a new airport in Istanbul that is set to become the world’s largest once complete, and achieved its key objective of structuring the deal with lender-friendly terms.
Salıpazarı Liman İşletmeciliği ve Yatırımları A.Ş, a joint venture between BLG Gayrimenkul Yatırımları ve Ticaret A.Ş. and Doğuş Holding A.Ş, secured a 14-year €1.2bn project finance facility just one month after the Turkish coup attempt and without any guarantees from the Turkish government.
Turkey’s Central Bank pressed on with a 50bp interest rate hike in November despite persistent criticism from President Recep Tayyip Erdogan, and held its benchmark one-week repo rate at 8% at the latest meeting in January – despite market expectations. Analysts believe the move won’t be enough to stem the currency’s decline, with further rate hikes expected – which could provoke further intervention, hurting investment.
YDA raised four-year money – pushing average tenors in Turkey’s local currency market – just one week after the coup attempt and two days after S&P downgraded the country’s sovereign credit rating to junk.
F. Mehmet Cosan, Chief Financial Officer and E. Murat Kosal, Managing Director of Otoyol talk to Bonds & Loans about new opportunities in Turkey’s infrastructure sector, and discuss the company’s structured funding programme for the Gebze-İzmir Motorway Project and the Osmangazi Suspension Bridge.
A number of hospital-focused public-private partnerships attest to the success of Turkey’s healthcare development programme over the last decade, and deals like this could set the stage for a resurgence in new projects for years to come.
- Pushing the Limits on Bond Pricing, Tenors, YDA sets New Benchmark for Turkey
- CASE STUDY: YDA Structures First Dual Islamic and Conventional PPP in Turkey for Konya Hospital
- Developing the Green Bond Markets in Turkey: Çiğdem İçel, Executive Vice President, TSKB
- CASE STUDY: Kazancı Holding Electrifies Local Loan Market with US$800mn Loan
- Pioneering Covered Bonds in Turkey: Mustafa Turan, VakifBank
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