Turk Eximbank sells $500mn of 3-year eurobonds at 9% coupon

By Akin Nazli in Belgrade October 26, 2023

Government-run Turk Eximbank has sold $500mn of eurobonds (XS2692231975) due January 2027 at a coupon rate of 9% and a yield to investor of 9.125% (priced at 99.586), the lender said on October 25.

Bank ABC (Arab Banking Corporation/Bahrain/ABC) International Bank plc, Citibank (Citigroup/New York/C), Emirates NBD Capital Limited, Industrial & Commercial Bank of China (ICBC/Shanghai/601398), ING Bank (Amsterdam/INGA), Mitsubishi UFJ Financial Group (MUFG Bank/Tokyo/8306) Securities EMEA, SMBC (Sumitomo Mitsui Banking Corporation/Tokyo/8316) Nikko, Standard Chartered Bank (London/STAN) and Societe Generale (Paris/GLE) acted as bookbuilders in the deal.

Turkey’s five-year credit default swaps (CDS) have once again moved above the 400-level, while the yield on the Turkish government’s 10-year eurobonds has surpassed the 9% level.

In May, unnamed sources told Bloomberg that Turkey’s central bank asked some local lenders to buy the country’s dollar bonds to prevent a CDS spike.

Looking at the global markets, sentiment remains turbulence-free, despite the latest rise in US Treasury yields (sailing through the 6%s across the curve) that was followed by the rise in the USD Index (DXY) (through the 107-level from the 99s seen in July).

As a result, the USD/TRY has been heading north again. On September 21, the pair once again broke through the horizontal barrier set at the 27.00-level. The latest record high, registered on October 25, is 28.3807.

Turkey’s government has lately been again applying a ‘five/10 kurus (pronounced as kurush, it is the Turkish cent) devaluation per day policy’ in the struggle to stop the slide. As of October 10, the new daily trench was being dug around the 28.15-level.

In line with local peers, Eximbank, the 10th largest bank in Turkey with Turkish lira (TRY) 464bn ($16bn) 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.

On October 24, Turk Eximbank redeemed a $500mn paper (XS1496463297), which paid a 5.375% coupon.

On January 24, the lender is to redeem another $500mn paper (XS1917720911), which pays an 8.25% coupon.

 

Turk Eximbank outstanding eurobonds
Issuer ISIN Coupon Volume (mn) Issuance Maturity
Eximbank XS1496463297 5.375% $500 Oct 24, 2016 Oct 24, 2023
Eximbank XS1917720911 8.25% $500 Jan 24, 2019 Jan 24, 2024
Eximbank XS1814962582 6.125% $500 May 3, 2018 May 3, 2024
Eximbank XS2395576437 9.375% $500 Jan 24, 2023 Jan 31, 2026
Eximbank XS2332876106 5.75% $750 Jun 29, 2021 Jul 6, 2026
Eximbank XS2692231975 9.00% 500 Oct 25, 2023 Jan 28, 2027

 

Table: Exim has five outstanding eurobonds.

 

In September, London-based We Sodaa unit of Istanbul-based Ciner Holding (owned by Turgay Ciner), sold $800mn worth of 5-year eurobonds (US92943TAA16) at a coupon rate of 9.50%.

So far this year, Turkish issuers have sold a total of $12bn worth of eurobonds across 12 papers.

 

Major eurobond issues by Turkish issuers
Issuer ISIN Coupon Volume (USD mn) End of placement Maturity UST+ CDS+
Eximbank XS2692231975 9.00% 500 Oct 25, 2023 Jan 28, 2027 341 496
We Soda (UK/Ciner) US92943TAA16 9.50% 800 Sep 28, 2023 Oct 6, 2028 488 565
Arcelik (ARCLK) XS2695038401 8.50% 400 Sep 25, 2023 Sep 25, 2028 393 467
TSKB (TSKB) XS2678232781 9.375% 300 Sep 19, 2023 Oct 19, 2028 487 550
Yapi Kredi Bank (YKBNK) XS2445343689 9.25% 500 Sep 13, 2023 Oct 16, 2028 486 550
Vakifbank (VAKBN) XS2677517497 9.00% 750 Sep 12, 2023 Oct 10, 2028 464 527
Akbank (subordinated) XS2611752317/XS2611752663/XS2611747234 9.60% 300 Jul 25, 2023 Jul 25, 2033(/28) 574 525
Treasury US900123DJ66 9.125% 2,500 Apr 13, 2023 Jul 13, 2030 597 396
Treasury US90014TAJ07 9.375% 2,250 Mar 8, 2023 Mar 14, 2029 517 393
Ziraat Bank US90014TAH41 9.50% 500 Jan 25, 2023 Aug 1, 2026 566 410
Eximbank XS2395576437 9.375% 500 Jan 24, 2023 Jan 31, 2026 552 387
Treasury US900123DG28 9.375% 2,750 Jan 11, 2023 Jan 19, 2033 619 427

 

Table: Major eurobond sales by Turkish issuers.

 

In 2022, Turkish borrowers sold $12bn of eurobonds across eight tenders. The Treasury was the dominant player, raising $11bn in five tenders. It redeemed $8bn on four papers during the year.

In 2023, Turkish eurobond sellers are supposed to redeem a total of $11bn across 15 papers. In the year to date, $9bn across 13 papers has been redeemed.

On December 10, Isbank (ISCTR) is to redeem a $400mn paper (XS1003016018), which pays a 7.85% coupon.

 

Upcoming eurobond redemptions by major Turkish issuers
Issuer ISIN Coupon Volume (mn) Issuance Maturity
Isbank (ISCTR) XS1003016018 7.85% $400 Dec 10, 2013 Dec 10, 2023
Treasury US900123CR91 7.25% $2,000 Oct 23, 2018 Dec 23, 2023

 

Table: Upcoming redemptions by Turkish issuers.

 

On July 11port operator Mersin Uluslararasi Liman Isletmeciligi (Mersin Port/MIP) said that it was closely monitoring opportunities to refinance its $600mn of outstanding 5-year eurobonds (XS2071397850) due November 2024, callable at par in November 2023.

In April, Albaraka Turk (ALBRK), a unit of Al Baraka Banking Group (Bahrain/BARKA), launched a tender offer for its $250mn subordinated (Basel III-compliant Tier IIsukuk paper (XS1301525207), due 2025.

Turkey’s finance minister Mehmet Simsek has, meanwhile, been talking about selling bonds worth $8.5bn for earthquake recovery efforts and $3bn for export credits to the UAE. It is unknown what type of papers will be sold and when.

 

Awaited eurobond auctions by major Turkish issuers
      Up to USDbn Sold Type
Oct 25, 2023 Ziraat Katilim Bankasi SPK Approval 0.5 - sukuk
Oct 5, 2023 Destek Yatirim Bankasi SPK Approval 0.02 - papers abroad
Sep 28, 2023 Mersin Liman SPK Approval 0.6 - eurobond
Sep 28, 2023 Kalibre Boru SPK Approval 0.075 - papers abroad
Sep 27, 2023 TAV (TAVHL) SPK Application 0.75 - papers abroad
Sep 20, 2023 Ford Otosan (FROTO) SPK Approval €0.5 - papers abroad
Sep 14, 2023 Eximbank SPK Approval 3 Oct 25, 2023 eurobond
Sep 14, 2023 Fiba Yenilenebilir Enerji Holding SPK Approval 0.2 - papers abroad
Sep 14, 2023 Akbank (AKBNK) SPK Approval 2 - papers abroad
Sep 14, 2023 Akbank (AKBNK) SPK Approval 2 - green
Sep 11, 2023 QNB Finansbank (QNBFB) SPK Application 4 - papers abroad
Sep 11, 2023 QNB Finansbank (QNBFB) SPK Application 1 - subordinated
Sep 7, 2023 Isbank (ISCTR) SPK Approval 2 - green
Aug 31, 2023 Vakifbank SPK Approval 1 Sep 19, 2023 green
Aug 31, 2023 Nurol Holding SPK Approval 0.5 - papers abroad
Aug 28, 2023 QNB Finansbank (QNBFB) Board mandate 0.3 - subordinated
Aug 24, 2023 Garanti (GARAN) SPK Approval 2 - green
Aug 9, 2023 Destek Yatirim Bankasi SPK Approval 0.015 - papers abroad
Jul 27, 2023 Isbank (ISCTR) SPK Approval GBP 0.02 - XS2658516732, Jul 29, 2024
Jul 20, 2023 Arcelik SPK Approval 0.5 - papers abroad
Jul 19, 2023 Garanti (GARAN) GMTN Programme Renewal 6 - papers abroad
Jun 20, 2023 Garanti (GARAN) SPK Application 2 - papers abroad
Jun 20, 2023 Garanti (GARAN) SPK Application €0.75 - mortgage-backed
Jun 8, 2023 QNB Finansbank (QNBFB) SPK Approval 0.6 - papers abroad
Jun 8, 2023 QNB Finansbank (QNBFB) SPK Approval 0.1 - green
May 17, 2023 Destek Finans Faktoring SPK Approval 0.00875 May 25, 2023 papers abroad
May 11, 2023 T.T.L. Tutun Sanayi SPK Approval 0.01 - papers abroad
Apr 27, 2023 Denizbank SPK approval 3 - papers abroad
Apr 27, 2023 Vakifbank VAKBN) SPK Approval €1 - mortgage-backed
Apr 27, 2023 Yapi Kredi Bank (YKBNK) SPK Approval €0.25 - mortgage-backed
Apr 27, 2023 Yapi Kredi Bank (YKBNK) SPK approval 3 Sep 13, 2023 green
Apr 27, 2023 Yapi Kredi Bank (YKBNK) SPK approval 7 - papers abroad

 

Table: Awaited eurobond sales by Turkish issuers.

 

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