Turkey’s Mersin Intnl Port sells $600mn of 5-year eurobonds at 5.375%

Turkey’s Mersin Intnl Port sells $600mn of 5-year eurobonds at 5.375%
By Akin Nazli in Belgrade November 20, 2019

Turkey’s Mersin International Port (MIP), the company that operates the country’s largest port terminal by both tonnage capacity and import/export container throughput, on November 7 sold $600mn of 5-year eurobonds due November 15, 2024 (XS2071397850) at a price of 99.676% and a coupon rate of 5.375%, Cbonds reported on November 19.

Citigroup, DBS and HSBC acted as bookrunners for the bond while Clearstream Banking S.A., DTCC, Euroclear Bank and Federal Reserve System were the depository trust companies.

There is yet to be an official announcement on the transaction from MIP.

Major eurobond issues by Turkish issuers
Issuer ISIN Coupon Volume (USD mn) End of placement Maturity date
Mersin Int. Port XS2071397850 5.375% 600 11/07/2019 11/15/2014
Treasury US900123CW86 5.600% 2500 11/06/2019 11/14/2024
Isbank XS2041003901 8.100% 50 08/07/2019 12/03/2029
Aktifbank XS2034164074 6.500% 40 07/31/2019 08/01/2029
Kuveyt Turk Bank XS2028862998 9.130% 200 07/02/2019 Perpetual
Treasury US900123CV04 6.350% 2250 07/10/2019 08/10/2024
Vakifbank     150 06/25/2019 2024
Vakifbank XS1970705528 8.125% 600 03/21/2019 03/28/2024
Sisecam XS1961010987 6.95% 700 03/20/2019 03/14/2026
Treasury US900123CT57 7.625% 1000 03/26/2019 04/26/2029
Yapi Kredi Bank XS1958649854 8.25% 500 03/07/2019 10/15/2024
Koc Holding XS1961766596 6.50% 750 03/05/2019 03/11/2025
QNB Finansbank XS1959391019 6.875% 500 02/28/2019 09/07/2024
Yapi Kredi Bank XS1957348441 FRN 321.6 02/25/2019 11/25/2027
Turk Telekom XS1955059420 6.875% 500 02/21/2019 02/28/2025
Treasury (sukuk) XS1816199373 5.80% 2000 02/21/2019 02/21/2022
Treasury XS1843443356 4.63% EUR1.25bn 01/31/2019 03/31/2025
Eximbank XS1917720911 8.25% 500 01/24/2019 01/24/2024
Treasury US900123CT57 7.625% 2000 01/16/2019 04/26/2029
source: cbonds, bne intellinews


On November 4, Reuters reported that the port operator mandated the bookrunners to sell $550mn of 5-year paper.

A subsequent Reuters report suggested on November 7 that the initial price guidance for the 5-year eurobond was set at more than 5%.

On November 15, the European Bank of Reconstruction and Development (EBRD) said it had bought $90mn worth of the MIP paper.

MIP plans to use the new issue to finance its $450mn of outstanding eurobonds due August 2020 (XS0957598070) and use the remaining sum for operations. In 2013, the EBRD bought $79.5mn of the 7-year paper, which pays a 5.875% coupon.

Singapore's PSA International controls 51% of MIP while Australia’s IFM Investors has a 39% stake and Akfen Holding of Turkey owns the remaining 10%.

In September, MIP said its eurobonds, listed on the Irish Stock Exchange, had become callable at par.

The activity of eurobond issuers across the Emerging Europe, EMEA and Eurasia regions, which has risen since last month, is still growing with the latest ruble-denominated eurobond sale by Russian hydropower major Rushydro a clear sign that the latest Fed easing is moving capital, albeit not as yet at levels seen in previous easing cycles.

“Emerging markets issuers are pumping out mandates, with the buy-side showing little sign yet of closing shop for the year, but investors are ‘not’ throwing cash at everything,” Global Capital reported on November 13 in a story entitled “EM conditions still welcoming for issuers but slip-ups are a danger”.

Capital Economics estimates that net capital outflows from emerging markets (EMs) eased in October, and more timely data point to a further improvement so far this month, the economic research company said on November 20 in its latest Emerging Markets Capital Flows Monitor for October.

But Capital doubts that, on a net basis, capital will flow into EMs anytime soon, even though foreign investors made net purchases of equities and bonds for the first time in nearly four months during the first week of November.

It was reported on October 18 that flag carrier Turkish Airlines had mandated lenders for eurobonds or Enhanced Equipment Trust Certificates. However, nothing has been heard of the move since then.

Earlier this month, Istanbul mayor Ekrem Imamoglu, a newcomer to global finance circles, was in London to test waters for a $500mn eurobond sale.

On November 8, government-run Vakifbank received approval from the Turkish capital markets board (SPK) to issue €1bn worth of mortgage-backed securities abroad.

On November 18, private lender Yapi Kredi cut the issuance limit for its mortgage-backed eurobonds, already approved by the SPK, to €500mn from €1bn.

During autumn last year, the Turkish government “encouraged” local pension funds to buy local lenders’ mortgage-backed securities designed to create room for fresh lending in balance sheets following the currency crash in August. There has been talk of selling mortgage-backed papers abroad since then, along with the sale of NPLs to foreign investors.

The level of foreign interest in the mortgage-backed eurobond auctions in the making is awaited with a good deal of curiosity but how many of the buyers will have ‘moustaches’ (Turks buying via foreign entities) or what the source of capital will be are questions that remain unanswered given “confidentiality” dogma in the global finance industry.

The next scheduled eurobond redemption by the Turkish Treasury is set for May 18, 2020. A repayment of €2bn for 10-year EUR-denominated papers is scheduled. Also in 2020, the Treasury will, on June 5, redeem $2bn in 15-year USD papers. On December 3, it will redeem JPY60mn in samurai bonds.

The next scheduled eurobond redemption by a Turkish lender is scheduled for January 24, 2020 when private lender Akbank will repay $500mn (XS1111101314).

Also in 2020, state-run Halkbank will repay, on February 5, $750mn (XS0882347072) while Industrial Development Bank of Turkey (TSKB) will redeem, on April 22, $350mn and Isbank will repay, on April 30, $750mn.

For the Turkish real sector, the next scheduled eurobond redemption is scheduled for April 24, 2020 when Koc Holding will repay $750mn (XS0922615819) of debt which was already refinanced in March this year.

Also in 2020, Yasar Holding will redeem, on May 6, $172mn (XS1132450427) while glassmaker Sisecam will repay, on May 9, $300mn, already refinanced in March this year. Mersin Port will redeem on, August 12, $450mn ((XS0957598070).

Fitch Ratings rates Turkey at BB-/Stable, three notches below investment grade. Moody’s Rating Services rates Turkey at B1/Negative, four notches below investment grade, while Standard & Poor’s has Turkey at B+/Stable, also four notches below investment grade.

Turkish Treasury's Eurobond Issues in 2019
Issue Date Currency Size Maturity Coupon (%) Price Yield (%) Spread Euro Cost (%)
14.11.2019 USD 2.5bn 14.11.2024 5.6 99.57 5.70 UST+407bp 3.319
10.07.2019 USD 2.25bn 10.08.2024 6.35 99.563 6.45 UST + 470 bps 3.803
26.03.2019 USD 1bn 26.04.2029 7.625 103.3 7.15 UST + 454 bps 4.859
21.02.2019 USD (Sukuk) 2bn 21.02.2022 5.8 100 5.80 MS + 318 bps  
31.01.2019 EUR 1.25bn 31.03.2025 4.625 99.36 4.75 MS + 446 bps  
16.01.2019 USD 2bn 26.04.2029 7.625 99.555 7.68 UST + 497bp 4.965
Turkish Treasury's Eurobond Issues in 2018
14.11.2018 EUR 1.5bn 16.02.2026 5.2 99.73 5.25 MS + 456.4 bp  
23.10.2018 USD 2bn 23.12.2023 7.25 98.917 7.50 UST + 447.5 bp  
24.04.2018 USD 2bn 24.10.2028 6.125 99.427 6.20 UST + 336.8 bp  
17.01.2018 USD 2bn 17.02.2028 5.125 99.411 5.20 UST + 266.7 bp  
Turkish Treasury's Eurobond Issues in 2017
13.09.2017 USD 1.75bn 11.05.2047 5.75 101 5.70 UST + 300.5 bp  
14.06.2017 EUR 1bn 14.06.2025 3.25 99 3.377 MS + 285 bp  
11.05.2017 USD 1.75bn 11.05.2047 5.75 98 5.875 UST + 286.7 bp  
06.04.2017 USD (Sukuk) 1.25bn 06.04.2023 5 100 5 MS + 285 bp  
23.02.2017 USD 1.25bn 25.03.2027 6 103 5.65 UST + 320.5 bp  
23.01.2017 USD 2bn 25.03.2027 6 99 6.15 UST + 375.7 bp  
source: treasury