Turkey’s Mersin Port sells $600mn of five-year eurobonds at 8.25% coupon

Turkey’s Mersin Port sells $600mn of five-year eurobonds at 8.25% coupon
Anchor symbol marks the location of Turkey's Port of Mersin. / Open Street Map Foundation, cc-by-2.0
By Akin Nazli in Belgrade November 14, 2023

Turkey's port operator Mersin Uluslararasi Liman Isletmeciligi (Mersin Port/MIP) has sold $600mn of eurobonds (US590454AC80) due 2028 at a coupon rate of 8.25% and a yield to investor of 8.50% (priced at 98.999), Reuters reported on November 9.

The paper is callable at the end of the second year. The company has not issued an official statement on the deal as yet.

Citibank (Citigroup/New York/C), DBS Bank (Singapore/D05) and HSBC (London/HSBA) acted as bookbuilders for the deal.

In July, MIP said that it was closely monitoring opportunities to refinance its $600mn of outstanding five-year eurobonds (XS2071397850) due November 2024, callable at par in November 2023.

In 2013, MIP sold the $450mn of seven-year eurobonds (XS0957598070) in question at a coupon rate of 5.875%.

At issuance, the paper was provisionally rated investment grade by both Moody’s Investors Service (Baa3) and Fitch Ratings (BBB-).

It was recorded as Turkey’s first ever infrastructure bond issue. The European Bank for Reconstruction and Development (EBRD) bought $80mn of the paper.

In 2019, to roll the existing $450mn paper, MIP sold $600mn worth of five-year eurobonds (XS2071397850) at a coupon rate of 5.375%. The EBRD acquired $90mn of the paper.

In 2013, the World Bank Group’s International Finance Corporation (IFCprovided $75mn for MIP’s East Mediterranean Hub Project by acquiring eurobonds issued by the company. In 2019, the IFC participated in the rollover of the paper by acquiring $80mn of new eurobonds.

In July, the EBRD said that it was in September set to approve a loan worth up to $50mn for the company, while the IFC said that it would also provide a loan worth up to $50mn to the MIP.

The loans will be used to finance the second phase of the construction of the East Mediterranean Hub Project.

The $408mn project was launched in 2013. Its first phase was completed in 2016. The second phase of the project aims to increase the port's container handling capacity to 3.6mn twenty-foot equivalent units (TEU) from the current 2.6mn TEU.

The plan is to commence construction works by 4Q23. The berth and new cruise terminal are expected to become operational by end-2025.

In 2022, the port handled 2.02mn TEU of containers, down 4% y/y. Revenues rose by 10% y/y to $353mn.

MIP currently has a B/Stable credit rating from Fitch Ratings, five notches below investment grade and in line with Turkey’s sovereign ratings.

MIP is a JV that operates the Mersin Port under a 36-year concession agreement signed in 2007 with the Turkish Privatisation Administration and Turkish State Railways.

Mersin Port, launched in 1962, is located on Turkey’s Mediterranean coast. It is Turkey's largest port in terms of total container throughput.

The port handles dry bulk, liquid bulk, containers and ro-ro cargoes. It also hosts ferryboat services carrying passengers between Turkey’s Mersin province and Northern Cyprus.

It has a number of tenants, including a vegetable oil company, grain storage company, soda ash facility and a petrol station.

Singapore-based PSA International has a 51% stake in MIP while Australia-based IFM Investors has 39% and Turkish conglomerate Akfen Holding holds the remaining 10%.

In 2005, PSA-Akfen consortium placed a winning bid of $755mn in the concession tender for the operating rights of the port.

In 2017, Akfen sold its 40% stake in MIP to IFM for a consideration of $869mn.

Many tonnes of cocaine are regularly intercepted at Mersin Port. On October 27, 610 kg of cocaine was seized at the port.

Looking at the global markets, there is no turbulence of note impacting sentiment. Turkey’s five-year credit default swaps (CDS) remain below the 400-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 9%-level.

The USD/TRY rate is, meanwhile, still heading north. On September 21, the pair once again broke through the horizontal barrier set at the 27.00-level. The latest record high, registered on November 10, is 28.8050.

The Turkish government’s ‘five/10 kurus (Turkish cents, pronounced as kurush) devaluation per day policy’ in the struggle to stop the slide is still in place. As of November 14, the latest daily trench was being dug around the 28.65-level, up 3% m/m and 55% y/y.

Following the local elections to be held in March, Turkey’s policy rate will reach its peak. The finance industry will then be welcomed in for the rate-cutting party.

So far this year, Turkish issuers have sold a total of $16bn worth of eurobonds across 16 papers.


Major eurobond issues by Turkish issuers
Issuer ISIN Coupon Volume (USD mn) End of placement Maturity UST+ CDS+
Mersin Port US590454AC80 8.25% 600 Nov 8, 2023 Nov 15, 2028 374 459
QNB Finansbank (QNBFB) (subordinated) XS2678233243 10.75% 300 Nov 9, 2023 Nov 15, 2033 (/28) 613 705
Treasury (sukuk) XS2689091846 8.51% 2,500 Nov 7, 2023 Jan 14, 2029 394 491
Ziraat Katilim (sukuk) XS2699906512 9.375% 500 Nov 6, 2023 Nov 12, 2026 476 570
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 XS2581381634 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.


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

Awaited eurobond auctions by major Turkish issuers
      Up to USDbn Sold Type
Nov 2, 2023 Aktifbank SPK Approval TRY0.75 - papers abroad
Oct 27, 2023 Pasha Yatirim Bankasi SPK Approval 0.025 - papers abroad
Oct 25, 2023 Ziraat Katilim Bankasi SPK Approval 0.5 Nov 6, 2023 sukuk
Oct 18, 2023 QNB Finansbank (QNBFB) SPK Application 4 - papers abroad
Oct 18, 2023 QNB Finansbank (QNBFB) SPK Application 1 - subordinated
Oct 9, 2023 QNB Finansbank (QNBFB) Board mandate 0.3 - subordinated
Oct 5, 2023 Destek Yatirim Bankasi SPK Approval 0.02 - papers abroad
Sep 28, 2023 Mersin Liman SPK Approval 0.6 Nov 8, 2023 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 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 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


Table: Awaited eurobond sales by Turkish issuers.