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bne August 2020 Companies & Markets I 17
Akbank Eurobond Prices
Fitch Ratings rates Turkey at BB-/Stable, three notches below investment grade. Moody’s Rating Services rates Turkey at B1/Negative, four notches below investment grade, while Standard & Poor’s has the country at B+/Stable, also four notches below investment grade.
On July 1, Ukraine (S&P/B/Stable, Fitch/B/Stable, Moody’s/ B3/Stable) was also in the market, looking to sell 12-year USD-denominated papers at 7.875%.
Earlier, in June, Belarus (Fitch/B/Stable, S&P/B/Stable, Moody’s/B3/Stable) placed $1.25bn of US dollar-denominated Eurobonds – a five-year tranche worth $500mn at 6.125% and a 10-year tranche amounting to $750mn at 6.375%.
On June 11, Croatia (Fitch/BBB-/Stable, Moody’s/Ba2/ Positive, S&P/BBB-/Stable) issued an 11-year, €2bn eurobond with a coupon of 1.5% and a yield of 1.643%.
On June 10, Albania (S&P/B+/Stable, Moody’s/B1/Stable) issued a seven-year eurobond worth €650mn, with a coupon rate of 3.65%.
In April and May, almost all countries in Eastern Europe sold eurobonds. Those that didn’t are preparing for auctions.
On June 20, Bloomberg quoted unnamed people with knowledge of the matter as saying that Turkey Wealth Fund (TVF) was considering a eurobond issuance later this year of at least $2bn and would soon choose around half-a-dozen banks to help arrange the deal. The wealth fund is rated three levels below junk by Fitch Ratings with a stable outlook. The sources were also reported as saying that TVF was working on getting a grading from a second international rating firm.
The fund’s apparent weighing up of a decision on a eurobond sale is taking place with central banks around the world pursuing stimuli that are spurring a global rally in junk bonds, Bloomberg noted.
In the last auction held by a Turkish issuer prior to Akbank’s latest issuance, the Turkish Treasury in February sold $2bn of 5-year eurobonds with a 4.25% coupon and $2bn of
a 10-year paper at 5.45%.
On June 5, the Turkish Treasury redeemed $2bn worth of eurobonds. They were sold in two parts, in 2005 and 2007, and pay a 7% coupon.
On May 18, it redeemed €2bn worth of eurobonds sold in two parts in 2010. They paid a 5.125% coupon.
In May, it tapped €1.64bn via one-year euro-denominated bonds and lease certificates with a 1.25% semi-annual coupon and $1.35bn from one-year USD-denominated bonds and lease certificates with a 1.75% semi-annual coupon from local lenders.
In March, the Treasury tapped €1.26bn from local lenders in EUR-denominated paper with a 0.75% semi-annual coupon.
In what’s left of 2020, the Treasury has Japanese yen (JPY) 60bn of samurai bonds maturing in December.
According to the latest data, Turkey was obliged to refinance a total of $148bn in external debt, excluding obligations to foreign branches and affiliates, in the 12 months ahead as of end-April.
In May and June, there has been an acceleration in Turkish borrowers’ striking loan deals, while Akbank’s eurobond deal may open the way for other issuers, although the cost is high.
Turkish companies have obtained a total of €944mn worth of coronavirus (COVID-19) crisis financing from the European Bank for Reconstruction and Development (EBRD) so far, almost a quarter of the €4bn coronavirus package made available by the development bank.
The World Bank has also been active in providing coronavirus rescue financing to Turkey.
Credit Rating Scales be Agency, Long-term
Source: Wolfstreet.com
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