Page 23 - Turkey Outlook 2023

Across recent years, Akbank (AKBNK) has set the Turkey benchmark
for the interest rates each season. In April 2022, government-run Ziraat
Bank launched the spring season.

Turkish banks release identical costs in syndicated loan renewals while
some of the lenders, particularly smaller ones, pay higher fees.

In the autumn refinancing season of 2022, nine Turkish banks renewed
an exchange rate-adjusted combined sum of $5.6bn, obtaining $4.3bn
worth of fresh loans. The rollover rate stood at 77%.

The private banks’ renewal rates were very low in the 60-70%s, while
the spreads were at record high levels. QNB Finansbank (QNBFB), a
unit of Qatar National Bank (QNB), registered the highest rollover rate.
Government-run banks registered 90-100% rates.

In August 2022, rumours in Turkey suggested that local banks did not
want to roll over their FX debt at the prevailing high costs while the
government was pressuring them to at least secure an 80% renewal
rate.

The all-in costs were in line with the benchmarks set by Akbank
(AKBNK), the big-cap unit of Turkish conglomerate Sabanci Holding
(SAHOL), namely the guaranteed overnight financing rate (SOFR) plus
425bp for the USD tranche and the euro interbank offered rate (Euribor)
plus 400bp for the EUR tranche (see full list below).

In the autumn season of 2021, the costs were in line with Akbank’s
benchmarks at Libor+2.15% and Euribor+1.75%.

In the spring season of 2022, 11 banks renewed $8bn worth of loans at
a combined renewal rate of 92% with borrowing at $7bn in total. The
costs of the USD-tranches stood at the guaranteed overnight financing
rate (SOFR) plus 275bp. The costs of the EUR-tranche were
Euribor+210bp. In spring 2021, the costs stood at Libor + 2.50% and
Euribor + 2.25%.

Benchmarks are achingly high at the moment as SOFR has surpassed
the 4%-level, compared to the 0.05% seen in October 2021, while
12-month Euribor has surpassed the 3%-level, compared to the minus
0.5% recorded in October 2021.

In June 2023, SOFR is to replace the current USD-benchmark London
Interbank Offered Rate (Libor). One-year Libor currently stands at over
5%.

Recently, all the benchmarks have been on the rise in parallel with the
global monetary tightening trend.

23 Turkey Outlook 2023 www.intellinews.com