In October 2022, TEB rolled its syndicated loan at a 77% rollover rate. The costs on the “slice that belongs to the biggest contributors in the loan” stood at 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.
As things stand, hopes for lower costs are now focused on 2024.
On October 5, TEB said that it had mandated its headquarters to obtain a 367-day syndicated loan in three tranches of USD, EUR and Chinese yuan (CNY).
However, a yuan tranche was not reported in the filing for the final deal.
In 2021, Denizbank, a unit of Emirates NBD, obtained the first ever syndicated loan with a yuan tranche seen in the Turkish banking industry. In 2022 and 2023, it rolled the loan with another yuan tranche.
Turkey has a huge trade deficit with China, which jumped to a record high of $38bn in 2022 from $29bn in 2021.
Separately, TEB said on October 21 that it had decided to recall its €125mn subordinated (Basel III-compliant Tier II) sukuk paper, sold in 2018 at a maturity of 10 years and callable on December 27, 2023.
Chart: TEB’s wholesale funding composition as of end-September.
In line with local peers, TEB, the 11th largest bank in Turkey with Turkish lira (TRY) 333bn ($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.
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.
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%.
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.
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