Turkish state's Vakifbank sells $150mn of 5-year eurobonds

Turkish state's Vakifbank sells $150mn of 5-year eurobonds
A slice of Domino's may be up for grabs in Turkey.
By Akin Nazli in Belgrade June 26, 2019

Turkish state-run lender Vakifbank has completed the issuance of $150mn worth of 5-year eurobonds via private placement to qualified institutional investors abroad, the lender said on June 25 in a stock exchange filing.

The lender did not provide information on the cost of the paper.

Also on June 25, Vakifbank said in a separate filing that it has repurchased a nominal $5mn of its eurobond maturing in 2022 (with ISIN code XS0849728190).

On June 21, the lender said in a filing that Fitch Ratings had affirmed its long-term foreign currency rating at B+/Negative.

On June 24, Global Capital reported that Turkish President Recep Tayyip Erdogan’s Istanbul revote defeat could open the bond issuance window for Turkish borrowers.

Moody’s under fire
Meanwhile, Moody’s Investors Service’s recent surprise downgrade of Turkey’s sovereign rating, which was followed by the downgrading of Turkish corporates’ ratings, has come under further criticism from those who see it as a political move linked to Erdogan’s escalated row with the US over Ankara’s planned purchase of Russian S-400 missile defence systems. The criticism is not only coming from the Turkish government and locals, foreign observers have also expressed scepticism about the legitimacy of the move.

Taking another tack, Global Capital on June 20 questioned the surprise downgrade with an op-ed entitled “Moody’s gives Turkey’s lenders a scapegoat”. It noted: “[..P]erhaps Moody’s fulfils another useful function. Lenders can raise margins without compromising their longstanding relationships with Turkey’s banks—after all, they have the ratings agencies to blame.”

In any case, Global Capital expects a 25bp rise in Turkish lenders’ syndicated loan renewal costs in the autumn season that will be launched in September by private lender Akbank, as per usual.

BlackRock and the ‘Gulenist’s’ gold miner
June 25 also saw a stock exchange filing by US-based BlackRock that indicated that the global investment giant has increased its stake in gold miner Koza Altin to 5.01% from 4.94%.

Shareholders that have a higher than 5% stake in a Borsa Istanbul-listed company are obliged to inform the public disclosure platform (KAP) regarding their transactions in company shares, according to local regulations.

Koza-Ipek Group is owned by openly Gulenist businessman Akin Ipek, who is self-exiled in the UK.

The group was seized by the Saving Deposit Insurance Fund (TMSF) based on a Turkish court ruling after allegations of participation in an attempt to topple the government in December 2013, when a scandal involving corruption claims and audio recordings of Erdogan erupted.

The court case continues but foreign investors’ interest in Koza Altin has not slackened.

Koza Maden is another Borsa Istanbul-listed company of the Koza-Ipek Group.

M&A wave continues
Meanwhile, the M&A wave in economically battered Turkey continues.

Turkey Private Equity Fund (TPEF) II owned by Turkish private equity company Turkven said on June 26 in a written statement that the fund was considering options, including the sale of an up to 29.9% stake in DP Eurasia, operator of the Domino's Pizza brand in Turkey and Russia, Reuters reported.

Fides Food Systems controlled by TPEF II has a 32.8% stake in DP Eurasia, according to the statement.

TPEF II also noted that the evaluations were at an early stage and there was no guarantee that the deal would be concluded.

The International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the Entrepreneurial Development Bank are the shareholders of Turkven, according to Turkven’s website.