Akbank (AKBNK), a unit of Turkish conglomerate Sabanci Holding (SAHOL), has obtained a 367-day sustainability-linked syndicated loan in two tranches of $266mn and €318mn, the lender said on October 27.
Story chart: Turkish corporates’ external debt rollover rates.
A total of 36 banks from 18 different countries, including 13 newcomers, participated in the facility.
The renewal rate jumped to 146%, while spreads fell sharply by 75bp. This could be seen as the first clear sign of the benefits of Turkey’s so-called economic normalisation policy applied since June.
In October 2022, Akbank launched the autumn syndicated loan renewals season for local peers at a rollover rate of 60% and at record high spreads of SOFR+4.25% and Euribor+4.00%.
Despite the significant recovery in spreads, the costs still stand close to the double digits as the benchmarks remain painfully high.
All the benchmarks have been on the rise in parallel with the global monetary tightening trend, which was expected to go into reverse this year. However, it seems rate cuts have been delayed to 2024.
In November 2024, the US is to hold its presidential election. Monetary policy moves have around a six-month lag in showing an impact on the real economy. The Biden administration may enter the election period with a tight monetary stance.
In line with local peers, Akbank, the sixth largest bank in Turkey with Turkish lira (TRY) 1.4 trillion ($53bn) worth of assets at end-June, has a B-/Stable (one notch below Turkey’s sovereign rating and six notches below investment grade) from Fitch Ratings and a B3/Stable (six notches below investment grade in line with Turkey’s sovereign rating) from Moody’s Investors Service.
Chart: Akbank’s wholesale funding profile as of October.
In the autumn season this year, a total of nine Turkish banks will roll a combined sum of $4bn. (See the full list below).
In the autumn refinancing season of 2022, nine Turkish banks rolled a combined sum of $6bn at a rollover rate of 77%. The costs were in line with the benchmarks set by Akbank, namely SOFR+4.25% and Euribor+4.00%.
In the spring season of 2023, 11 banks renewed a combined sum of $7bn at a combined rollover rate of 88%. All costs were reported as in line with the benchmarks set by Akbank, namely SOFR+4.25% and Euribor+4.00%.
Chart: Rollover Ratio of Syndicated Loans and Cost of Syndicated loans calculated by the central bank for the top 10 big-cap banks.
Turkish banks conduct 367-day (a ‘trick’ maturity for registering loans as long-term that uses two extra days) syndicated loan renewal seasons twice a year, with one season in spring (April-July) and the other in autumn (October-November).
Across recent years, Akbank has set the Turkey benchmark for the interest rates each season. In April 2022 and 2023, Ziraat Bank launched the spring seasons. However, Ziraat could not provide the costs this year. It awaited Akbank’s released costs to provide its costs.
The share of syndicated loans in Turkey’s and Turkish banks’ external funding composition has declined in recent years. Turkey rolls over a combined sum of around $150-200bn each year.
Nevertheless, the banks’ syndicated loan renewals are a good indicator in following developments in the sustainability of Turkey’s external debt burden.
|Jun-23||Denizbank||$530||117%||364-367-day||$297||€183||Chinese yuan 255mn|
|Jun-23||Garanti BBVA (GARAN)||$433||73%||367-day||$199||SOFR+4.25%||€219||Euribor+4.00%|
|Jun-23||Yapi Kredi (YKBNK)||$580||78%||367-day||$202||SOFR+4.25%||€353||Euribor+4.00%|
|May-23||QNB Finansbank (QNBFB)||$329||102%||367-day||$171||SOFR+4.25%||€144||Euribor+4.00%|
|May-23||Turk Eximbank||$670||89%||364-day||$54||€522||Chinese yuan 325mn|
|Nov-22||Garanti BBVA (GARAN)||$401||65%||367-day||$155||SOFR+4.25%||€239||Euribor+4.00%|
|Nov-22||QNB Finansbank (QNBFB)||$545||104%||367-day||$185||SOFR+4.25%||€253||Euribor+4.00%|
|Nov-22||Turk Eximbank||$588||101%||1-year||€404||€136||Chinese yuan 350mn|
|Nov-22||Yapi Kredi Bank (YKBNK)||$458||61%||367-day||$210||SOFR+4.25%||€249||Euribor+4.00%|
Table: Full list of Turkish banks’ syndicated loan renewals.