One of Turkey’s largest private lenders, Garanti Bankasi, has received regulatory approval from the Capital Markets Board (SPK) to issue up to $6bn worth of eurobonds abroad, SPK said on February 7 in its regular weekly bulletin.
Garanti Bankasi will redeem €500mn worth of eurobonds in July and another $750mn worth of eurobonds in October, according to its 2019 operating plan guidance.
Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) controls a 49.85% stake in Garanti Bankasi, according to public disclosure platform (KAP).
Green light for Turk Telekom
The latest SPK bulletin also showed that the country’s largest telco Turk Telekom has been given the green light to issue up to $500mn worth of eurobonds abroad.
In 2014, Turk Telekom issued $1bn worth of senior unsecured eurobonds in two equal $500mn tranches with maturities of 5 and 10 years, according to an investor presentation on its website. In 2015, the telco issued another $1bn worth of senior unsecured eurobonds in two equal $500mn tranches with maturities of 5 and 10 years.
On February 4, Turk Telekom said in a bourse filing that it has allocated $20mn to repurchase its bonds currently trading on the Irish Stock Exchange with the ISIN Code XS1028951264. According to the bourse filing, the company on February 1 bought bonds nominally-valued at $5mn at an average price of $93.125 for a total consideration of $4.69mn.
On February 6, it said it had bought another $5mn of nominally-valued bonds at an average price of $93.25 for a total consideration of $4.66mn. On February 7, it bought an additional $2.5mn of nominally-valued bonds at an average price of $93.625 for a total consideration of $2.34mn.
The largest M&A deal in Turkey in 2018 was the debt restructuring of Turk Telekom. The default of Ojer Telekom (Otas), the former major shareholder in Turk Telekom, is Turkey’s largest ever default.
Otas borrowed $4.75bn in 2013 to refinance its acquisition of a 55% stake in Turk Telekom. Akbank has $1.7bn worth of exposure to Otas’ loan while Garanti Bank contributed with $1bn and Is Bankasi with $500mn.
The 55% stake in Turk Telekom was taken over by a special purpose vehicle, Levent Yapilandirma Yonetimi (LYY), which is controlled by Akbank, Garanti Bank and Isbank.
Turk Telekom made a net profit of TRY2.22bn ($428.9mn) in Q4 versus a net loss of TRY113mn in the same period a year ago thanks to the bounce back of the Turkish lira, the company said on January 30 in a bourse filing.
Fitch Ratings rate Turk Telekom at BB+/Negative while Standard & Poor’s has the company at BB-/Stable.
Akbank in for $600mn of refinancing
On February 8, Reuters reported that Akbank was seeking a $600mn worth of refinancing for its $1.2bn equivalent syndicated loan maturing in March.
In March 2018, Akbank obtained the syndicated loan in $604.5mn and €483mn tranches while the cost for one year tranches stood at Libor+1.30% and Euribor+1.20%, and at Libor+2.10% for the two-year tranche.
Akbank said in an emailed statement that it cut the all-in cost of the refinancing by 25bp to Libor+250bp and Euribor+240bp compared to Libor+2.75% and Libor+2.65% obtained in September for a syndicated loan facility from international markets equivalent to $980mn, comprised of $285mn and €591mn with a maturity of 367 days.
Global Capital announced on February 6 that it chose Akbank’s September loan as “Turkish Deal of the Year.”
Akbank is the first Turkish lender set to refinance a deal in 2019, Global Capital reported on February 8.
Turkish lenders have been restructuring large corporates’ loans since last year while public lenders were recently employed to restructure individuals’ credit card debts and also football clubs’ debts.
Tables on loan restructurings scrapped
There is no official figure available on the total amount restructured by Turkish lenders while CNN Turk reported on February 1 that the banking watchdog BDDK issued an amendment to the current regulation to scrap the tables on loan restructurings in the footnotes of lenders’ financials.
Offering more ‘good tidings’, BDDK released a draft amendment to the current regulation to “allow” local lenders to restructure consumer loans for maturities up to 60 months, daily Sabah reported on February 7.
“Banking is not a place to collect deposits and sit on them,” Turkish finance minister Berat Albayrak told chief economic correspondents of Turkish media outlets on February 6, Seref Oguz wrote on February 7 in his column for Sabah.
Albayrak also complained that loan volumes were not growing despite declining interest rates.
“The deterioration in the credit market continues in the first month of 2019. As of January 25, total credit volume rose by 12.4% yoy, the slowest pace in more than two years,” Isbank Research said on February 7 in its monthly economic review.
BBVA Research was extremely positive in its economic outlook for Turkey released on February 7. “Firm policies helped to stabilize Turkish Financial Markets and the economy is re-balancing fast. The economic activity adjustment gained momentum at the end of 2018 but there are early signs of bottoming-out. We expect policymakers to stick to sound policies,” it said.
Turkish automaker Tofas said on February 7 in a bourse filing that its consolidated net income rose by 4% y/y to TRY1.33bn in 2018 but it declined by 23% y/y to TRY326.5mn in Q4.
Tofas foresees its overall production falling to 235,000-260,000 units in 2019 after declining by 21% y/y to 302,000 in 2018.