By Akin Nazli in Belgrade
Akbank (AKBNK), a unit of Turkish conglomerate Sabanci Holding (SAHOL), has obtained a 367-day sustainability-linked syndicated loan in two tranches of $310mn and €267mn, the lender said on April 17.
Story chart: Turkish corporates’ external debt rollover rates.
A total of 45 banks from 10 countries, including 16 newcomers, are participating in the facility.
The renewal rate stood at 120%, while spreads fell sharply by 175bp compared to last year and by 100bp compared to the autumn season.
The benefits of Turkey’s so-called economic normalisation policy applied since June last year are clearly observed in the external debt rollovers.
The cost of the USD-tranche stood at the guaranteed overnight financing rate (SOFR) plus 250bp while the cost of the EUR-tranche was the euro interbank offered rate (Euribor) plus 225bp.
In April 2023, Akbank rolled its loan at a renewal rate of 71% and at record high spreads of SOFR+4.25% and Euribor+4.00%.
In the spring season of 2023, 11 banks renewed a combined sum of $7bn at a combined rollover rate of 88%. All costs were reported as in line with the benchmarks set by Akbank.
In the spring season of 2024, the same 11 banks will roll a combined sum of $6bn.
In the autumn season of 2023, a total of nine Turkish banks rolled a combined sum of $4bn. The costs were 75bp lower compared to a year previously. The exchange rate-adjusted combined rollover rate came in at 129%.
Despite the significant recovery in spreads, the costs are still high due to the benchmarks.
Central bank chart: Top 10 Turkish banks’ combined syndicated loan renewal rates and costs.
SOFR persists above the 5% level, compared with the 0.05% seen in October 2021. Twelve-month Euribor fell below the 4% level but still compares as significantly high with the minus 0.5% recorded in October 2021.
As things stand, hopes for lower benchmarks are now focused on the second half of 2024.
Turkish banks conduct 367-day (a ‘trick’ maturity for registering loans as long-term that uses two extra days) syndicated loan renewal seasons twice a year, with one season in spring (April-July) and the other in autumn (October-November).
They release identical costs, while some of the lenders, particularly smaller ones, pay higher fees.
In recent years, for each season Akbank has set the Turkey benchmark for the interest rates. In April 2022 and April 2023, government-run Ziraat Bank launched the spring seasons. However, Ziraat could not provide the costs this year. It awaited Akbank’s released costs to provide its costs.
The share of syndicated loans in Turkey’s and Turkish banks’ external funding composition has declined in recent years. Turkey rolls over a combined sum of around $150-200bn each year.
Despite the lower share in the composition, the banks’ syndicated loan renewals are a good indicator for tracking developments in the sustainability of Turkey’s external debt burden.
Table: Full list of Turkish banks’ syndicated loan renewals.
