Industrial Development Bank of Turkey (TSKB) on July 28 concluded the spring season for Turkish banks’ syndicated loan renewals with an announcement that it rolled its facility at a 119% EUR/USD exchange rate-adjusted renewal rate.

The development bank reported a rollover rate of 155% in July 2024.

Story chart: Turkish corporates’ external debt rollover rates.

Loans rolled twice a year

Turkish banks roll their syndicated loans twice a year, with one season in spring (April-July) and the other in the autumn (October-November).

Akbank (AKBNK) launches both seasons by setting the Turkey benchmark for the interest rates. All leading banks release identical costs, while some of the lenders, particularly smaller ones, pay higher fees.

Some banks such as TSKB do not release costs at all.

See all the links and charts here.

Table: Full list of Turkish banks' syndicated loan renewals.

Setting benchmarks for Turkish borrowers

The share of syndicated loans in the external funding composition of Turkey and Turkey's banks has declined in recent years. Turkey rolls over a combined sum of around $200bn each year.

Despite the lower share in the composition, the banks’ syndicated loan renewals are a good indicator when tracking developments in the sustainability of Turkey’s external debt burden.

They share exact maturities and costs, setting benchmarks.

In March, Turkey's sovereign wealth fund (TWF/TVF) rolled its two-year syndicated loan at a 139% rollover rate and at costs of the overnight financing rate (SOFR) plus 2.25% and the euro interbank offered rate (Euribor) plus 2.00%.

In May, oil refiner Tupras (TUPRS) obtained a fresh five-year $500mn sustainability-linked syndicated loan at an all-in cost of SOFR+2.25%, including commissions.

In December, carmaker Tofas (TOASO), a 38:38 JV between Turkey’s Koc Holding (KCHOL) and Stellantis (Milan/STLA), obtained a €295mn sustainability-linked eight-year syndicated loan at costs ranging between the six-month euro interbank offered rate (Euribor) plus 2.27% and 2.37%, with the costs depending on the performance in complying with the sustainability criteria.

It is rare that borrowers release the exact maturities and costs of their loans. However, benchmarks are used in all loan agreements.

Ratings

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

Table: Credit ratings of major Turkish banks.

124% combined rollover rate in spring 2025

In the spring season of 2025, 11 banks were to roll a combined sum of $8bn.

A newcomer, namely Burgan Bank  Turkey (the small-cap unit of Burgan Bank (Kuwait/BURG)), obtained a $262mn loan.

As a result, 12 banks obtained a combined sum of $10bn, suggesting a combined rollover rate of about 124%.

In the spring season of 2024, 11 banks rolled a combined sum of $6bn at a combined renewal rate of 129%.

Central bank chart: Top 10 Turkish banks’ combined syndicated loan renewal rates and costs.

Longer maturities

Between 2016 (the year of the failed coup attempt in turkey) and autumn 2024, Turkish banks stuck to 367-day maturities (a ‘trick’ maturity for registering loans as long-term that uses two extra days on a year).

In the autumn 2024 season, 371-day, 734-day and 1,101-day tranches emerged as a new phenomenon.

During the spring, three-year-plus-two-days maturities emerged while only two banks stuck to the 367-day maturity.

Costs fall further

Akbank set a benchmark of SOFR+1.60% for the 367-day USD tranches this year, sharply down (90bp) compared to the SOFR+2.50% released in the spring 2024 season and 15bp lower compared to the SOFR+1.75% released for the autumn 2024 season.

The cost of 367-day EUR tranches, meanwhile, fell to Euribor+1.35% from Euribor+2.25% in the spring of last year and Euribor+1.50% in the autumn.

Shift to ‘orthodoxy’ between spring 2023 and autumn 2023

In the spring season of 2023, the same 11 banks renewed a combined sum of $7bn at a combined rollover rate of 88% and at record-high spreads of SOFR+4.25% and Euribor+4.00%.

In the autumn season of 2023, nine Turkish banks rolled a combined sum of $4bn at a combined rollover rate of 129%. The costs fell to SOFR+3.50% and Euribor+3.25%.

The significant recovery in spreads and, as a result, rollover rates is due to the political U-turn to 'orthodoxy' in economy management staged by the Erdogan regime following the general election held in May 2023.

Euribor down to 2%s

SOFR fell below the 4.50% level in parallel with the Fed’s rate cuts. It still compares significantly high with the 0.05% seen in October 2021.

The easing in the US has been blocked by uncertainties created by Donald Trump. By end-2025, the policy rate and SOFR are expected to approach the 4.00%-level.

Twelve-month Euribor fell below the 2.50% level but still compares as significantly high with the minus 0.5% recorded in October 2021.

The European Central Bank (ECB) has executed a sharper easing to hit a 2.00% policy rate. No further decline is on the horizon in Euribor.