Beijing-based AIIB to extend $300mn in loans to Turk Eximbank

By bne IntelIiNews November 26, 2023

Beijing-based Asian Infrastructure Investment Bank (AIIB) on November 22 approved $300mn in loans for Turkish government-run Turk Eximbank, according to a statement from the investment bank.

The project entails two components. Component A encompasses a $200mn sovereign-backed partial debt guarantee from the AIIB to help raise financing from international banks to support green infrastructure development.

Component B encompasses a $100mn sovereign-backed loan from the AIIB to Turk Eximbank to help restore basic infrastructure services and reconstruct infrastructure in Turkey’s earthquake-hit region.

In line with local peers, Eximbank, the 10th largest bank in Turkey with Turkish lira (TRY) 520bn ($18bn) of assets at end-September, 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.

At end-2022, Turk Eximbank’s outstanding loan debt to the AIIB stood at TRY 5bn ($250mn). The lender has two outstanding syndicated loans that have Chinese yuan (CNY) tranches.

In 2019, the AIIB extended a four-and-a-half-year loan of $250mn to Turk Eximbank under a Treasury and Finance Ministry guarantee to reduce liquidity constraints caused by the COVID-19 pandemic.

To date, the AIIB’s total investments in Turkey amount to $4bn across 19 infrastructure projects, mostly in the energy and transport sectors.

The AIIB, launched in 2016, currently has 109 member countries. By March, it had extended $40bn of loans to 212 projects in 34 different countries. It operates with a paid-in capital of $100bn.

Turkey has a huge trade deficit with China. The deficit jumped to a record high of $38bn in 2022 from $29bn in 2021.

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