Turkcell obtains $150mn syndicated loan as analysts warn of tougher year

Turkcell obtains $150mn syndicated loan as analysts warn of tougher year
By Akin Nazli in Belgrade February 25, 2019

Turkey’s largest mobile operator Turkcell has signed a loan agreement worth $150mn with JP Morgan Chase Bank’s London branch and AB Svensk Exportkredit under a guarantee provided by the Swedish Export Credit Agency (EKN) in order to fund purchases from Ericsson AB and Ericsson Telekomunikasyon, the Turkish telco said on February 25 in a stock market filing.

The loan facility will be available until April 2021 to be utilised in three equal tranches, each with a maturity of 10 years. The total annual cost of the first tranche is Libor+2.10% while the cost for the second and third tranches is fixed at 5.35%. 

Turkcell said on February 20 that its net income rose by 2% y/y to TRY2bn in 2018.

On February 21, Ivan Kim of VTB Capital said in a research note on Turkcell that VTB had cut Turkcell to Hold from Buy, with a 12-month target price of Turkish lira (TRY) 16.

Post its 48% dollar-terms gain since the beginning of 3Q18 (86% from early September), VTB believed that Turkcell’s share price might take a breather.

Turkcell is facing a more challenging year in 2019. The 4Q18 slowdown in Turkey points to downside risks to mobile service revenue performance this year, Kim said, adding that Turkcell’s balance sheet remained strong, with the net long FX position post the Fintur sale.

Turkcell shares were up 2.6% d/d to TRY14.23 as of 16:30 local time on February 25 while the Borsa Istanbul’s benchmark BIST-100 index was up 1.47% to 104,703. The annual loss on Turkcell shares stood at 0.77% versus the 15% y/y rise on the BIST.

Banks’ NPL sales ‘to rise 33%’
Also on February 25, the CEO of Turkey’s largest non-performing loans (NPL) management company Hayat Varlik, Hilmi Guvenal, told Bloomberg that Hayat Varlik expected overall sales of NPLs by the Turkish banking industry to increase by 33% y/y in 2019 as banks freed up capital to cope with a surge in corporate-debt restructurings.

Turkish lenders would probably sell around TRY10bn ($1.9bn) worth of bad-loan portfolios this year for a total consideration of TRY500mn, Guvenal also said.

There are 19 active NPL management companies in Turkey.

On February 18, the European Bank of Reconstruction and Development (EBRD) said that it was providing a TRY100mn loan support to Hayat Varlik in a move to help Turkey tackle the increase in NPLs in its banking sector.

On February 19, Magar Kouyoumdjian of Standard & Poor’s said that the Turkish banking sector’s NPLs, defined as loans with payments at least 90 days overdue, would double to around 8% of total loans around the end of 2019, although a broader definition of problem loans would mean the share reaching a maximum 15-20% from the current 10-15%.

Possible Naturelgaz IPO ahead
Also on February 25, Naturelgaz CEO Hasan Turan told Reuters that Turkish conglomerate Global Yatirim Holding (Global Investment Holding) was evaluating the possibility of holding an IPO for its energy unit Naturelgaz. However, he did not specify a date.

Naturelgaz has an 18-20% share in Turkey’s non-piped natural gas transport sector, as well as a 75% share in the compressed natural gas (CNG) market, according to Turan.

Turkish non-piped natural gas sales were estimated at 800mn cubic metres, or at 2% of the country's natural gas market, in 2018, Turan also said.

Naturelgaz’s sales revenues increased by 11% y/y to TRY184.5mn in January-September while its Ebitda rose 275% to TRY30.5mn.

In May 2017, ambitions to make the London Stock Exchange (LSE) IPO of Global Yatirim Holding’s port operating unit Global Ports Holding (GPH) one of the biggest listings of the year sank when the float priced at the bottom end of the range. GPH, the largest international operator of cruise ports by the number of ports and passenger volume, raised $230mn from the flotation of a 38.2% stake.

The price range for GPH’s IPO was set at between 735-875 pence sterling per share, meaning that the company was assessed as having a market capitalisation of from $598mn to $697mn. The final IPO price was determined at 740 pence sterling per share.

Borsa Istanbul-listed Global Yatirim Holding’s shares were down 0.53% d/d to TRY3.77 as of 17:00 local time on February 25 while the annual loss stood at 9%. LSE-listed GPH’s shares were up 3.36% to GBX385.

VTB Capital said also on February 25 in a note that it was reiterating its Buy rating for GPH with its unchanged 12-month target price of GBX650 after GPH said earlier in the day in a bourse filing that it had won a tender to operate the Nassau cruise port in the Bahamas as part of a consortium with a 49% stake.

The Nassau cruise port is the third port GPH has added to its portfolio across the last 12 months.