Turkey’s largest conglomerate Koc Holding will on January 30 apply to the Capital Markets Board (SPK) to issue up to $1bn worth of eurobonds within a one-year period following regulatory approval, the holding company said on January 29 in a stock market filing.

Koc Holding shares were up 1.48% d/d to TRY17.15 as of 15:00 local time on January 29 while the Istanbul bourse’s benchmark BIST-100 was up 1.17% to 102,476. The annual loss on Koc shares stood at 6% versus the 12% y/y gain showing on the BIST-100.

Koc is the only Turkish company that made it on to the Fortune 500 list published in 2017 while its combined revenues amount to 7% of Turkey’s GDP, according to an investor presentation on the company’s website.

Moody’s rates Koc Holding at Ba2/Negative while Standard & Poor’s rates it at BB-/Stable. Both ratings are one notch above Turkey’s sovereign rating.

Moody’s’ rating reflects the company's strong financial profile and balanced portfolio of investments in mature and high-growth companies, which have diversified the entity's dividend income. The holding company has a track record of maintaining solid liquidity and follows a prudent approach in managing its investment portfolio, according to Moody’s.

Banks bearing the brunt
“Banks are bearing the brunt of government interventions to bolster the economy. Most rated corporates will continue to display a degree of resilience to the downturn, but renewed exchange rate volatility arising from policy missteps would make business decisions more difficult and the operating environment challenging,” Moody’s said on January 22 in a report entitled “Ongoing policy uncertainty in Turkey amid economic downturn poses credit risks across sectors”.

Koc’s consolidated net income remained unchanged on an annual basis at TRY3.83bn in January-September despite a 41% y/y rise in combined revenues (before revenue eliminations) to TRY220bn.

On January 24, Reuters reported that Koc Holding had applied to the banks for an international bond issue.

Koc Holding’s outstanding eurobonds volume stands at $1.5bn.

Koc’s last eurobond issuance was held in March 2016 for the sale of $750mn worth of 7-year bonds due 2023. They bear a coupon rate of 5.25% and a yield to the investor of 5.40%.

In April 2013, the conglomerate sold $750mn worth of 7-year eurobonds with a coupon rate of 3.5%.

The Financial Times reported on January 20 that 30 investors, including portfolio managers and analysts from Goldman Sachs, Macquarie, and AllianceBernstein, met with executives of Turkey’s Akbank, Koc Holding and Mavi Jeans in New York to discuss the prospect of a Turkish turnaround.

On January 15, lender Yapi Kredi said in a bourse filing that its shareholders Koc Holding and UniCredit had each bought $200mn worth of its subordinated bonds.

Yapi Kredi’s bonds pay a 13.875% yield to investors across the first five years. They will be subject to value reduction if the core capital adequacy ratio falls below 5.125%, the statement added.