Story chart: Rollover Ratio of Syndicated Loans and Cost of Syndicated loans.
The exchange rate-adjusted renewal rate was very low, standing at 60%, while spreads marked record high levels.
Benchmarks are achingly high at the moment as SOFR surpassed the 3%-level, compared to the 0.05% seen in October 2021, while 12-month Euribor is hovering in the 2.70%s, compared to the minus 0.5% recorded in October 2021.
Recently, all the benchmarks have been on the rise in parallel with the global monetary tightening trend.
In October 2021, Akbank obtained a 367-day syndicated loan in two tranches of $460mn and €207mn. The cost of the USD-tranche was lower by 35bp at Libor+2.15% and the cost of the EUR-tranche was lower by 50bp at Libor+1.75% compared to the Libor+2.50% and Euribor+2.25% seen in October 2020 (see full list below).
Turkish banks conduct 367-day—a ‘trick’ maturity for registering loans as long-term by using two extra days—syndicated loan renewal seasons twice a year, with one season in spring (April-May) and the other in the autumn (October-November).
The spring season lasted from April to July. Eleven banks renewed $8bn worth of loans at a combined renewal rate of 92% with borrowing at $7bn in total.
The costs of the USD-tranches stood at the guaranteed overnight financing rate (SOFR) plus 275bp. The costs of the EUR-tranche were Euribor+210bp. In spring 2021, the costs stood at Libor + 2.50% and Euribor + 2.25%.
In the just-launched autumn season, nine Turkish banks will roll over a combined sum of $6bn. In the autumn season of 2021, nine Turkish banks renewed around $6bn worth of syndicated loan facilities at a combined renewal rate of 102%.
In August this year, rumours in Turkey suggested that local banks did not want to roll over their FX debt at current costs while the government was pressuring them to at least secure an 80% renewal rate.
Akbank launched the season at a very low renewal rate. If Akbank's peers follow its path, it will mean around $2-3bn worth of capital outflows. It would not be a big deal for Turkey. Government-run banks might go for higher renewal rates.
As things stand, Turkey does not have big hopes when it comes to attracting financing from the financial industry. As a result, unfavourable loan renewals come as no real surprise. The government has been chasing up FX inflows from “friendly” countries, while the unidentified capital flows channel has lately been working overtime.
Given the situation as regards the widely doubted reliability of Turkey’s official macro data releases, syndicated loan renewals are a good indicator in following developments in the sustainability of Turkey’s external debt burden. Akbank has not provided a good signal, although a systemic default is still not seen on the cards.
Table: Full list of Turkish banks’ syndicated loan renewals.
|Jun-22||Denizbank||$453||120%||367-day||$196||€204||364-day||Chinese yuan 255mn|
|May-22||Garanti BBVA (GARAN)||$594||100%||367-day||$284||SOFR+2.75%||€291||Euribor+2.10%|
|May-22||Yapi Kredi (YKBNK)||$811||91%||367-day||$350||SOFR+2.75%||€432||Euribor+2.10%|
|May-22||QNB Finansbank (QNBFB)||$364||118%||367-day||$137||SOFR+2.75%||€212||Euribor+2.10%|
|Nov-21||QNB Finansbank (QNBFB)||$350||100%||367-day||$198||Libor+2.15%||€135||Euribor+1.75%|
|Oct-21||Yapi Kredi Bank (YKBNK)||$822||96%||367-day||$361||Libor+2.15%||€397||Euribor+1.75%|