Turkey’s Halkbank (HALKB) last month sold $700mn of a subordinated Additional Tier 1 (AT1) eurobond (XS3094751198) at a coupon rate of 9.30%, according to a filing by the lender.

Citibank (Citigroup/New York/C) and Industrial & Commercial Bank of China (ICBC/Shanghai/601398) acted as intermediaries in the deal while London-based Herbert Smith Freehills Kramer acted as the legal adviser.

The paper was listed on the Vienna Stock Exchange. 

AT1 bonds are perpetual. Halkbank’s paper is callable at the end of the fifth year. Turkish banks generally recall their subordinated papers after five years. They are supposed to provide a maturity date for registration purposes. They write down 10 years for AT1 papers.

Sold last eurobond in July 2016

Halkbank sold its last eurobond (XS1439838548) in July 2016. It redeemed the paper in July 2021.

Between July 2016 and June 2025, the lender remained out of the eurobond market. Nor does it have an outstanding syndicated loan.

Fitch removed from negative watch

Halkbank has a B+/Stable rating from Fitch Ratings and a B1/Positive from Moody’s Investors Service.

In June, Fitch removed Halkbank from Rating Watch Negative (RWN) and assigned a stable outlook to the lender.

The ratings agency recalled that the negative watch was assigned due to uncertainty over the timing and potential outcome of protracted US legal proceedings over a possible breach by Halkbank of US sanctions against Iran.

It is clear Fitch is by now not anticipating a bad surprise from the proceedings, though there is an inexplicable sentence in its latest “Rating action commentary” observations on the court case, namely: “The removal of Halk's ratings from RWN – which had indicated a heightened probability of a downgrade and the likely direction of such a change – is no longer appropriate. This is due to uncertainty over the timing and potential outcome of protracted US legal proceedings into a possible breach of sanctions against Iran, which hinder our assessment of the likely impact on Halk's ratings.”

It is an interesting error as the rating action is simply about the court case. Has everyone at Fitch missed this sentence? Is the rating agency wary of relaying gathered indications that the court case will not pose a problem in the coming period?

Fitch first introduced a watch on Halkbank’s rating in 2018. Downgrades followed. The bank remained under watch between October 2019 and June 2025.

Zarrab turns state witness, Atilla arrested while in US for eurobonds roadshow

In March 2016, the US judiciary arrested Turk Reza Zarrab. He was accused of being a central figure in a sanctions-busting scheme that breached American sanctions on Iran between 2012 and 2013.

Zarrab later on turned state witness. Nowadays, he is running a horse farm in the US.

In March 2017, the US judiciary arrested Halkbank’s then deputy general manager Hakan Atilla, who was in the US for a eurobonds roadshow.

Turkey’s sovereign wealth fund (TWF/TVF) controls a 91.5% stake in Halkbank, while the remaining 8.5% is listed on Borsa Istanbul.

Trump intervenes

Later in 2017, Donald Trump, whose first term in the White House stretched from January 2017 to January 2021, fired the prosecutor, namely Preet Bharara, who was conducting the Halkbank case.

The legal process continues. However, it seems that Halkbank has felt no pressure since Trump returned to the White House in January for his second presidency.

After Trump retook the Oval Office, all of the prosecutors who were prosecuting New York mayor Eric Adams for receiving bribes from Turkish nationals, resigned.