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local conglomerate Akkok Holding—has signed a loan agreement with local lender Yapi Kredi Bank—a JV between Italy’s UniCredit and Turkey’s largest conglomerate Koc Holding—to restructure an $854mn loan.
IGA, the operator of Turkey’s one-year-old international mega airport, is reportedly seeking to refinance up to €5bn ($5.6bn) in loans it used to construct the facility.
Turkey needs to diversify and widen its electricity export markets to reduce power oversupply on its domestic market.
Turkey and Azerbaijan formally marked the completion of the $6.5bn Trans-Anatolian Natural Gas Pipeline (TANAP) on December 1. Turkey and Russia is set to launch the Turkstream pipeline with a ceremony in Istanbul on January 8.
2.0 Politics
2.1 INSIGHT: Erdogan extends swap deal with Qatar to
$5bn
The overall limit of a swap agreement signed in August last year by the central banks of Turkey and Qatar has been raised from $3bn Turkish lira- and Qatari riyal-equivalent to $5bn equivalent to the Turkish and Qatari currencies. Erdogan was on November 25 in Qatar on a one-day visit. On November 26, he called on Turks to “leave the dollar” and convert their foreign currencies into Turkish lira (TRY) in order to boost Turkey’s currency and show “patriotism”.
It’s been quite a long while since Erdogan last called on Turks to sell their dollars. Meanwhile, Turks, along with foreigners who can access TRY, have been enjoying “discounted USD sales” in exchange for Turkish lira via public lenders.
Recently, the Erdogan administration obtained $2.5bn from 5-year eurobonds, but $1.5bn of this has already been repaid to redeem a previous issue. Mersin International Port raised $600mn from a eurobond sale, but $450mn was earmarked for the redemption of a paper maturing in August 2020, something of a long horizon for Turkish policymakers.
EBRD inflows slow. Also, inflows from the European Bank of Reconstruction and Development (EBRD), which has been invested in Turkey for a decade, have slowed significantly this year, while the local lenders have been net external debt payers.
The real sector in the meantime has weighed on short-term trade credits to meet FX financing needs.
FDI inflows are also unpromising, despite the currency collapse and undeclared bankruptcies that might be expected to produce more cheap company buys and market entries for foreigners venturing into Turkey. One project Erdogan has taken a particular interest in—securing for Turkey a new Volkswagen car plant costing more than $1.2bn—is looking less and less likely to materialise, given the opposition from the German “Volk”.
The cyclical difficulty for the Turkish economy caused by the end of the tourism season is bringing the string of current account surpluses to an end—it is coinciding with the latest government-backed loan growth causing the end of import compression. The big squeeze was caused by the rebalancing that took
6 TURKEY Country Report December 2019 www.intellinews.com
