Garanti latest Turkish bank to renew syndicated loan at higher costs, lower roll-over ratio

Garanti latest Turkish bank to renew syndicated loan at higher costs, lower roll-over ratio
By Akin Nazli in Belgrade May 17, 2019

Turkey’s Garanti Bank has signed for a 367-day syndicated loan, consisting of two tranches of $326mn at a cost of Libor+2.50% and €408.75mn at a cost of Euribor+2.40%, the lender said on May 17 in a bourse filing.

Garanti targeted borrowing $600mn but the final amount was set at a total of $783.8mn after demand of $1bn was encountered, the lender said in a press release.

In May 2018, the lender renewed the full amount of its €1.2bn syndicated loan. The loan consisted of three tranches: a $457mn, 367-day tranche had a cost of Libor+1.30% while a €670.5mn, 367-day tranche had a cost of Euribor+1.20% and a $145mn, 2-year and 1-day tranche had a cost of Libor+2.10%.

In December 2018, the lender obtained a $1.3bn syndicated loan in four tranches with maturities of 367-days, 2-years 1-day and 7-years. The lender did not provide any further details on the costs.

In January 2019, Garanti Bank said in its operating guidance that it expected its syndication rollovers to be less than 100% due to high costs and comfortable liquidity.

Banks’ refinancing progresses undeterred
Despite new waves of economic turbulence now hitting Turkey, the Turkish lenders’ spring loan refinancing season that takes place in April and May is progressing undeterred. However, costs are higher and roll-over ratios are declining.

Libor+2.50% and Euribor+2.40% costs are almost double the Libor+1.30%s and Euribor+1.20%s seen a year ago while the 2-year 1-day tranches seen in spring 2018 are not available currently. However, the spring 2019 costs compare lower than the Libor+2.75%s and Euribor+2.65%s seen in autumn 2018 following the balance of payments crisis in August.

Also on May 17, central bank data showed that Turkey’s overall external debt repayment obligations for the next 12-month period edged up by 0.2% m/m to $177.4bn at end-March from $177.1bn at end-February. The figure stood at a record high of $185.9bn at end-February 2018 and declined to $173.9bn at end-October last year as a result of the ‘curing’ effect of the August currency crunch.

When lenders’ and corporates’ obligations to their branches and affiliates abroad are excluded, Turkey was obliged to repay $156.3bn in foreign debts across the next 12 months as of end-March, up from $156bn as of end-February.

Turkish lenders’ credit repayments across the next 12 months amounted to $43.8bn at end-March.