The Industrial Development Bank of Turkey (TSKB) has mandated Citi, ING, Standard Chartered Bank, BNP Paribas, Commerzbank, Bank ABC and SMBC Nikko to hold investor meetings abroad to sell eurobonds, TSKB said on January 9 in a stock exchange filing.

The development bank also reminded investors that in July last year it received an issuance certificate from the Turkish capital markets board (SPK) to sell up to $600mn, or an equivalent sum in other currencies, of eurobonds that would be quoted on the Irish Stock Exchange under its MTN (Medium-Term Note) Program in accordance with Rule144A/Regulation S.

In July 2019, the lender said in a stock exchange filing that the $600mn new issue limit would be added to $400mn already approved by the SPK in 2018.

TSKB will redeem, on April 22, $350mn worth of eurobonds that pay a 5.125% coupon.

In October 2019, TSKB successfully redeemed senior unsecured eurobonds worth $350mn.

Fitch Ratings rates TSKB at B+/Stable, four notches below investment grade, while Moody’s Investor Services rates it at B3/Negative, six notches below investment grade.

Isbank Group has a 50.92% share in TSKB while state-run Vakifbank controls 8.38% and 38.6% is on free-float on Borsa Istanbul.

As of end-Q3 last year, TSKB, established in 1950, retained its position as Turkey’s 13th largest lender by assets, among a total of 47 local lenders. It kept that standing with a total asset volume of TRY40bn, down from TRY42bn at end-Q1 2019, which equates to around a 1% share in total Turkish banking industry assets, according to latest data from the Banks Association (TBB).

Market players are also awaiting a eurobond sale by the Turkish Treasury. The Treasury usually holds one in the first month of the new year.

Turkey’s 5-year credit default swaps (CDS) have been at around 280bp since mid-December.

Fitch Ratings rates Turkey at BB-/Stable, three notches below investment grade. Moody’s Rating Services rates Turkey at B1/Negative, four notches below investment grade, while Standard & Poor’s has Turkey at B+/Stable, also four notches below investment grade.

Geopolitical stress

Across the past week, a lot of attention went to the geopolitical stress generated by the latest US-Iran tensions, but, for now at least, Tehran and Washington appear to have backed off from a full-blown confrontation. The global financiers of the post-financial crash era have so far avoided a big war that might wreck the market strategies of the recovery, and when such tensions do no more than cause momentary hiccups in the financial action there are, at the end of the day, too many dollars around printed by the Fed for the markets to pause too long for thought.

“The US-Iran crisis has made for a slow start to CEEMEA bond issuance, though confidence is growing among issuers after Iran executed a revenge strike on Tuesday that some in the bond and loan markets have seen as a way out of escalating tensions any further. Blow out bonds from Mexico and Slovenia have also helped confidence and investors seem keen to buy after a decent end to 2019,” Global Capital reported on January 8 in a story entitled “Iran crisis stalls CEEMEA issuance but pipeline healthy”.

Turkish issuers raised the lion’s share of $16bn via eurobond sales in 2019, with $10.6bn worth of eurobonds, equal to the whole amount raised in 2018, issued in the first quarter, according to Global Capital’s 2020 outlook.

Turkish borrowers’ total loan issuance, meanwhile, fell by $8bn y/y to $15bn in 2019, according to the publication.

With global interest rates set to remain low, Turkey should still have access to international markets in 2020, the publication noted.

In November, Istanbul Mayor Ekrem Imamoglu confirmed that the municipality was seeking Treasury approval for a $500mn eurobond sale.

On November 8, government-run Vakifbank received approval from the Turkish capital markets board (SPK) to issue €1bn worth of mortgage-backed securities abroad.

On December 23, Vakifbank said in a stock exchange filing that it received approval from the local banking watchdog BDDK to recall its 10-year subordinated (Tier II) eurobonds worth $500mn. The paper carries a call option at the end of the fifth year and Vakifbank will redeem the paper on February 3. Vakifbank issued the paper in January 2015 at a yield of 6.95%.

Also on December 23, Vakifbank applied to the SPK to issue up to $5bn worth of eurobonds.

On November 18, private lender Yapi Kredi cut the issuance limit for its mortgage-backed eurobonds, already approved by the SPK, to €500mn from €1bn.

Reuters reported on October 18 that national flag carrier Turkish Airlines had mandated lenders for eurobonds or Enhanced Equipment Trust Certificates. However, nothing has been heard of the move since then.

The next scheduled eurobond redemption by the Turkish Treasury is set for May 18, 2020. A repayment of €2bn for 10-year EUR-denominated papers is scheduled. Also in 2020, the Treasury will, on June 5, redeem $2bn in 15-year USD papers. On December 3, it will redeem JPY60mn in samurai bonds.

The next scheduled eurobond redemption by a Turkish lender is scheduled for January 24, 2020 when private lender Akbank will repay $500mn (XS1111101314).

Also in 2020, state-run Halkbank will repay, on February 5, $750mn (XS0882347072) while Isbank will repay, on April 30, $750mn.

For the Turkish real sector, the next scheduled eurobond redemption is scheduled for April 24, 2020 when Koc Holding will repay $750mn (XS0922615819) of debt which was already refinanced in March last year.

Also in 2020, Yasar Holding will redeem, on May 6, $172mn (XS1132450427) while glassmaker Sisecam will repay, on May 9, $300mn, already refinanced in March last year. Mersin Port will redeem on, August 12, $450mn ((XS0957598070), already refinanced in November.

Major eurobond issues by Turkish issuers
Issuer	ISIN	Coupon	Volume (USD mn)	End of placement	Maturity date
Fibabank	XS2096028571	Floating	30	12/31/2019	12/31/2029
Garanti Bank	XS2094608580	5.25%	50	12/12/2019	12/20/2024
Mersin Port	XS2071397850	5.375%	600	11/07/2019	11/15/2014
Treasury	US900123CW86	5.60%	2500	11/06/2019	11/14/2024
Isbank	XS2041003901	8.10%	50	08/07/2019	12/03/2029
Aktifbank	XS2034164074	6.50%	40	07/31/2019	08/01/2029
Kuveyt Turk Bank	XS2028862998	9.13%	200	07/02/2019	Perpetual
Treasury	US900123CV04	6.35%	2250	07/10/2019	08/10/2024
Vakifbank			150	06/25/2019	2024
Vakifbank	XS1970705528	8.125%	600	03/21/2019	03/28/2024
Sisecam	XS1961010987	6.95%	700	03/20/2019	03/14/2026
Treasury	US900123CT57	7.625%	1000	03/26/2019	04/26/2029
Yapi Kredi Bank	XS1958649854	8.25%	500	03/07/2019	10/15/2024
Koc Holding	XS1961766596	6.50%	750	03/05/2019	03/11/2025
QNB Finansbank	XS1959391019	6.875%	500	02/28/2019	09/07/2024
Yapi Kredi Bank	XS1957348441	FRN	321.6	02/25/2019	11/25/2027
Turk Telekom	XS1955059420	6.875%	500	02/21/2019	02/28/2025
Treasury (sukuk)	XS1816199373	5.80%	2000	02/21/2019	02/21/2022
Treasury	XS1843443356	4.63%	EUR1.25bn	01/31/2019	03/31/2025
Eximbank	XS1917720911	8.25%	500	01/24/2019	01/24/2024
Treasury	US900123CT57	7.625%	2000	01/16/2019	04/26/2029
source: cbonds, intellinews