Page 70 - TURKRptOct19

Turk Telekom’s Net Debt/Ebitda ratio, which reached 2.3 in Q3 2018, declined to 1.76 in Q2 2019 from 1.86 in Q1 2019.
Turk Telekom posted a net loss of TRY1.39bn in 2018 versus a net profit of TRY1.14bn in 2017.
On September 19, local private lenders Garanti, Is Bank and Akbank mandated Morgan Stanley as financial adviser for the sale of Levent Yapilandirma Yonetimi (LYY), a special purpose vehicle that holds a 55% stake in Turk Telekom.
In July 2018, the 55% stake was taken over by LYY, controlled by Akbank, Garanti Bank and Isbank.
Former owner of the stake, Otas—a unit of the Dubai-based Oger Telecom— borrowed $4.75bn, Turkey’s all-time-high corporate loan, in 2013 to refinance its acquisition of the stake. But it failed to keep up payments, making for the largest default in Turkish history and the largest M&A deal in 2018.
Akbank has $1.7bn worth of exposure to Otas’ loan while Garanti Bankasi contributed with $1bn and Is Bankasi with $500mn.
In November 2005, Oger Telecom, owned by the Lebanese Hariri family, took over the stake for a period of 21 years in the largest privatisation tender in Turkish history for a consideration of $6.55bn.
Since the privatisation deal is to end in 2026, it is thought that it will not be easy for Turkish lenders to sell the stake.
The announcement regarding the mandate of Morgan Stanley for the stake sale came after the banking watchdog BDDK instructed on September 17 banks to convert TRY46bn in loans to non-performing loans (NPLs) and provision for losses by year-end.
Isbank has sold Turkish lira (TRY) 350mn (€56mn) of 10-year domestic Basel-III compliant Tier 2 (subordinated) bonds, reaching a level of sales higher than the TRY300mn that was originally planned, the lender said on October 1.
The paper will pay 3-month floating coupons. The annual yield was determined by adding a 350bp spread over 5-year domestic government bonds.
The bonds carry an early redemption option at the end of the fifth year.
Approximately 70 qualified individual and institutional investors, including pension and investment funds, showed interest in the auction.
Combining an issuance of TRY1.1bn with a cost of 13.9494% in 2017 and TRY800mn with a cost of 27.69% in June this year, Isbank’s total outstanding subordinated loan volume reaches TRY2.25bn.
The lender has a domestic subordinated bonds issuance limit of TRY5bn, approved by Turkish banking watchdog BDDK, for qualified investors without the holding of public offerings.
Isbank’s pension fund has a 39.99% stake in the lender while main opposition Republican People’s Party (CHP) controls 28.09%, inherited from the founder of the Turkish Republic and also Isbank, Mustafa Kemal Ataturk.
Some 61.46% of the 31.04% free float was held by foreign investors as of October 1, according to Is Yatirim’s daily foreign share bulletin.
Favourite target. Isbank is usually a favourite target of Turkish President
70 TURKEY Country Report October 2019 www.intellinews.com