Page 39 - TURKRptSep22

The spring season for Turkish banks’ syndicated loan renewals lasted from April to July. Ten banks renewed $8bn worth of loans at a combined renewal rate of 92% with borrowing $7bn in total.
The costs of the USD tranches stood at the guaranteed overnight financing rate (SOFR) plus 275bp. The costs of the Euro tranche were Euribor+210bp.
In June 2023, SOFR is to replace the current USD benchmark London Interbank Offered Rate (Libor).
In the spring of 2021, costs stood at Libor + 2.50% and Euribor + 2.25%.
Recently, all benchmarks have been on the rise in parallel with the global monetary tightening trend.
Turkish banks conduct 367-day—a ‘trick’ maturity for registering loans as long-term by using two extra days—syndicated loan renewal seasons twice a year, with one season in spring (April-July) and the other in the autumn (October-November).
Across recent years, Akbank (AKBNK), the big-cap unit of Turkish conglomerate Sabanci Holding (SAHOL), had set the benchmark for the interest rates each season.
In the latest spring season, government-run Ziraat Bank launched the season.
In the upcoming autumn season, nine Turkish banks will rollover a combined sum of $6bn.
In the autumn season of 2021, nine Turkish banks renewed around $6bn worth of syndicated loan facilities at a combined renewal rate of 102%.
Costs came in at Libor+2.15% for the USD tranches (35bp lower compared to the Libor+2.50% seen in November 2020) and at Libor+1.75% for the EUR tranches (50bp lower than the Euribor+2.25% seen in November 2020).
Prior to each refinancing season, it is a tradition for the finance industry to froth up over whether Turkish banks will be able to renew their loans. Critics say it's a ruse in the pursuit of securing higher returns.
The media, meanwhile, pursues its clicks. For the upcoming autumn season, media “analysis” of the finance industry’s considerations has already begun. Be careful as to what you give credence.
At the end of the day, let’s repeat the cliché: “If you owe the bank $100, that's your problem. If you owe the bank $100mn, that's the bank's problem.”
Dealing with a Turkey default would be the finance industry’s problem and Turkey knows that pretty well.
In addition to the global tightening, Fitch Ratings recently downgraded Turkey’s sovereign rating by one notch to B with a Negative outlook. Bank and company downgrades followed along as per usual.
Rumours in Turkey, meanwhile, suggest that local banks do not want to roll over their FX debt at current costs while the government is pressuring them to at least secure an 80% renewal rate.
39 TURKEY Country Report September 2022 www.intellinews.com